Tuesday, April 13, 2010

Great Successes in Estimating

I finally got around to gathering up over a dozen unopened envelopes that described their contents as IMPORTANT TAX DOCUMENTS ENCLOSED and finally did something about the taxes.

The taxes are always a disaster. Despite the fact that I filled out the W4 at work as "single, 0" I never have enough money withheld from my paycheck.* Every spring I end up sending a check for thousands of dollars to the IRS.**

So this year I planned ahead and sent the IRS $6000 in estimated taxes in September. I figured that would make things non-absurd in April.

And it did! My estimate was off by $53. That's less than 1%. For the first time in memory, I'm going to be getting a refund! (This is also good because if you get a refund in year n and you pay the same dollar value of taxes in year n + 1, then even if you underpay in n + 1, you don't have to pay penalties.) Of course getting a refund is much less exciting when you have to get out the checkbook to make the first quarter payment of estimated taxes for the 2010 tax year.

*Even before I entered any 1099s (of which I had over a dozen), TurboTax was already like, "Dude, you need to have HR take more money out of your checks." After entering only the W2s and nothing else it already had me owing the IRS $1000. This is what happens when you have to take the standard deduction and have no children. Can I get SSNs for the pet mice?

**You could say that I run a very profitable small business. Or you could say that my summer employer pays me as a contractor with a 1099 despite the fact that they micromanage the work that I have very little autonomy doing while using materials and supplies that they provide.