Fog Creek Software
Discussion Board




YAR (Yet Another Rant)

So 3 months ago I'm wondering how to deal with consulting income that I've paid no taxes on.  Look into it, decide to pay worst case scenario.  Sent the IRS a 5 figure check in early April, with the appropriate form.

Tuesday, I get a 5 figure check from the IRS.  Why?  Hellifino.  Put it in the bank yesterday.  Today I get a letter from the IRS saying I prepaid my 2003 taxes, didn't need to, and they sent the money back.  Um, WTF?  Too bad I didn't connect that check of 2 months ago with what they sent, or I would have never put that turkey in the bank.  I think that just screwed me over big time.

To make it worse, they sent interest on what I paid.  Works out to about 0.5%.  Not for the 2 months.  Noooo, what they sent works out to about 0.5% for *a friggen year*.  Gee, thanx.

So now I get to deal with them yet again.  I figure they're gonna say "hey, you owe use bookoo bux interest for that 2-3 months you didn't pay".  Gonna be a lot more than 0.5% interest, I can guarenfriggentee you that.

No questions, no comments asked for.  Just a rant.  Not only did I get to spend an hour on pre-guessing my 2004 taxes, now I also get to argue with them on whether or not I actually paid the damn things when I should have.

Friggin incompetant asshats.  Fire Bush, work your way down.

Snotnose
Saturday, June 19, 2004

Can you say accountant?

Matthew Lock
Saturday, June 19, 2004

Do you have a job where payroll taxes are withheld?  If so and this was a one-time income jump then you may not have had to prepay.  There are so called safe harbor provisions that give a one year exemption to to prepaying taxes on such increases as long as a few conditions are met.  They're covered in the instructions for form 2210:

http://www.irs.gov/pub/irs-pdf/i2210.pdf

Doug
Saturday, June 19, 2004

You know, this may be a first for the IRS.
"Dammit, I sent them money when I didn't have to. They realized it, sent it back with interest for the time they held it and an apology. The IRS is evil incarnate!"

BTW, something I've learned that's helped to lower my blood pressure - don't get angry at things you think are going to happen. They don't always come true.

Philo

Philo
Saturday, June 19, 2004

Snotnose, not to be a dick about it, but you really need to get better informed about how to handle taxes when you've got a side business. I've known some guys who had decent side businesses who wound up in hock to the IRS and even had to leave independent business because they knew the nuts and bolts well but they buried their heads in the sand about taxes.

Basically, if you earn most or all of your income as independent income (not taxed) you need to become familiar with making quarterly tax deposits. You'll need to make deposits for state and for federal at least. Basically, if you don't have an employer withholding taxes on earnings, the IRS expects you to do that task yourself. And if you don't do this, as mentioned, you're going to own underpayment penalties and interest. Yeah, there are limitations and dependencies upon last year's income but basically, you've got to withhold your own taxes.

And at the end of the year you're going to need to file Schedule C with your 1040 and report all of the earnings.

It sounds to me like you misreported the quarter or the year that your prepayments applied to so the IRS sent the money back.

It sounds like you've got decent income coming in. So you have absolitely no excuse not to get with a CPA and spend some of that money (deductible as business expense against your income) to get acquainted with the process of taxation for small business and get set up on a withholding plan.

Bored Bystander
Saturday, June 19, 2004

Thanks for reminding me, as I sit here unemployed, how much tougher some people have it.

Kyralessa
Saturday, June 19, 2004

That payment was my quarterly taxes.  That was the whole point to making it, and filling out the 2004 form.  Yep, I verified that last night.  I didn't send them a form saying "2003 prepayment" by mistake, it says right on top "estimated 2004 taxes".

The consulting was a one time gig, not an ongoing sideline.  I hate marketing myself and just want to be a wage slave.  Which I am now, thankyewverrymuch.

Snotnose
Saturday, June 19, 2004

*  Recent Topics

*  Fog Creek Home