Thursday, March 20, 2008

A Taxing Issue

Hopefully this will be the last bit of my past fiscal irresponsibility that comes back to haunt me. I filed a late return for my 2006 taxes, in which I owed $550 due to my not adjusting my withholding after a raise. I have to pay a penalty of $156.75 for filing late ($123.75) and paying late ($33.00) and I also have to pay interest of $50.09 as of my notice from 3/17. This comes to a total of $756.84 owed for 2006, plus I owe $32 for 2007. This works out to a total of $788.84 owed to the IRS.

I have until June 20th to pay this in full before it goes to collections. It will accrue a modicum of interest in that time - the total if I don't pay anything until then will be $810.09.

Right around that time is when the tax stimulus rebate is expected, and it will go first to paying off any money owed. If I get the full refund of $600, this means I will owe a shade over $200 all told. This isn't too bad, but it's annoying because I had plans for that rebate (namely putting it into my IRA). I'm planning on paying off my 2007 tax now and putting the $130 I recently received from my MA state refund toward my federal tax, so my total payment will be lower with that cut out of the principal.

In the end this isn't a major problem, but it definitely hurts. I'm glad that I'm tying up the last loose end of my financial irresponsibility from the past but it's too bad I have to pay for it now. This also adds to my total debt and will affect my ability to hit my goals for this year, although they are still attainable. We shall see.

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