Friday, December 23, 2011

Estimated Tax

Since I am retired, I have to pay estimated tax every quarter.  My state  (IL) basically taxes every dollar we make and they increased the tax rate by 67% this year.  We get a $2000 deduction but that is basically all. Interesting question, how can anyone live on $2000 per year?

Every year our income increases in the last quarter and not in a predictable fashion, so usually I try to pay the amount that would be due if the amount we made in that quarter + previous quarters was the total,  If you do that usually you have to fill out a 2210 form; where you input the total income up to the quarters and pay more or the same amount that would be due.  The form is horrible to fill out (of course, I have the computer do it for me).

So each year, I send in the 1040 form with the 2210 form AND EVERY YEAR IL IRS claim I owe a penalty since I didn't pay exactly 1/4 of the amount each quarter that is due at the end of the year.  So I have to write them a nasty letter and give them copies of the forms that I already had sent in.  They EVERY YEAR ignore the 2210 form (even though there is a properly marked box on the 1040 telling them that I have sent a 2210 form).

Interesting though is that the US IRS always gets this right.

Other problems I have with the Estimated Taxes is that you have to do it every quarter.  When they withhold too much, they don't give you interest or a penalty.  I don't mind paying them what I owe (though with this screwed up state - we have the highest per capita shortfall, even though they raised the tax 67% - I would rather give my money to charity).

There has been a simple tax form that has be proposed :  2 lines 1) How much do you make and 2) send in that amount.

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.Mark Twain

It is a good thing that we do not get as much government as we pay for. Will Rogers

Alexander Hamilton started the U.S. Treasury with nothing and that was the closest our country has ever been to being even. Will Rogers

There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him. Robert A. Heinlein

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it ~ Ronald Reagan

People who complain about paying their income tax can be divided into two types: men and women.

What's the difference between a tax auditor and a rottweiler? A rottweiler eventually lets go.

A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.  ~Alexis de Tocqueville

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