An Early Visit with the Tax Man and Weekend Reading

January 16, 2010 by  
Filed under Taxes

Yesterday was the deadline to pay estimated federal income taxes. Although I have taxes withheld from my paychecks, we always end up owing money at tax time. Sometimes the amount we owe puts us close to or in the underpayment penalty range. My normal method of solving that problem is to run our basic data through some tax software in early December and then have our accountant withhold extra amounts from my final paychecks. (In some years, that’s been the entire paycheck.)

Because of some uncertainty as to how much income would be distributed to the shareholders at the end of the year, I decided to pay the extra taxes on January 15, the deadline for paying estimated taxes for the 4th quarter of 2009.

I ran our numbers through some free TaxAct software that I had downloaded. (Normally I use TurboTax but it did not have a free download. Instead, you were required to use the online version which I did not want to do.) As expected, we owed a big chunk of change to the IRS. For one thing, our mortgage interest deduction was cut almost in half because we had paid off the lake house mortgage in February.

I calculated how much we needed to pay now to get us within the “no penalty” safe harbor range, then mailed a big check to the government. I’m not sure we will entirely avoid a penalty, because the IRS looks at your withholdings for each quarter. ┬áBut I did the best I could under the circumstances. We will be writing another big check when we file our return in April but I have reserved the cash to do that.

Staying with a tax theme, this weekend I have to prepare for and then take another set of IRS qualification tests to allow me to return as a volunteer tax preparer under the VITA/AARP Program. Some of you long-time readers may recall that I wrote a series of eleven weekly posts last winter and spring reporting on my experience as a volunteer tax preparer. I was invited back this year so you will reading about those experiences again this year. Stay tuned for that.

I have a few suggestions for your week-end reading. First, I stirred things up a bit at the Free Money Finance blog with some comments on his post about “earning” rewards on his credit cards. In my typical not-so-diplomatic style, I tried to make the point that rewards from credit cards are nothing more than a partial rebate of the increased retail prices we all pay because merchants are forced by reality to take these cards. ┬áTheir costs are passed on to us. FMF and some of his readers accused me of living in a fantasy land occupied by unicorns at the check-out counter. (Everyone is so sensitive about hearing the hard truth.) I understand playing within the system that exists as long as you really understand what the system is doing to you. Full disclosure: We have a rewards card. It gets us the occasional free ticket on Southwest Airlines. But I would rather have no rewards for anyone and lower retail prices. So it’s all good. I haven’t seen any unicorns and everyone gets to enjoy their rewards cards.

Second, I jumped back on the personal finance carnival bandwagon so head on over to Darwin’s Finance and check out this week’s Carnival of Personal Finance.

Third, if you are interested in developments in the annuity field, I wrote a post on my Go To Retirement blog about some new variable annuity products. We don’t own a variable annuity and probably won’t because of their high fees and surrender charges. But I like reading about them, just to be sure.

Finally, if you are on a path to lower your costs for watching television, Boxee has released an updated version of its software. Boxee is sort of like the TV and movie version of Picasa. It goes out and finds video content on the web and on your PC, organizes it, and presents it for your viewing pleasure. The product is not perfect yet but it has promise. And right now, it’s free. You can check it out here. (Be sure to download the recently released beta version.)

Have a great weekend and say a prayer for the folks in Haiti.

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7 Responses to “An Early Visit with the Tax Man and Weekend Reading”
  1. Gail says:

    I really enjoyed the previous posts based on your experience as a volunteer tax preparer and look forward to reading more this year!

  2. kitty says:

    “Finally, if you are on a path to lower your costs for watching television, Boxee has released an updated version of its software. Boxee is sort of like the TV and movie version of Picasa. It goes out and finds video content on the web and on your PC, organizes it, and presents it for your viewing pleasure”

    Interesting. But wouldn’t it only find free content i.e. no copyrighted movies or similar things? So how would it replace television?

    For example, next week I plan to watch Susan Fromke’s documentary “The Audition” on PBS. I doubt you’d find something like this or any of the PBS Great Performances or any kind of a movie in this free content. Or am I wrong here?

    • Kitty: Many if not most of the broadcast and cable networks make their shows and specials available for online viewing, often within 24 hours of their initial broadcast. It’s similar to accessing them using a service like Comcast on Demand. Boxee will find most of that content and organize it for you.

      • kitty says:

        TML – you are talking about programming owned by network. But what about the shows that the networks get to show on TV but not make available for free? For example, I ABC can show all episodes of Dancing with the Stars on its website, but if, for example, ABC broadcasts Harry Potter (just an example) on one Saturday night, it probably doesn’t have a right to show it for free on the internet. Now, you are the lawyer here, I am not, so tell me if I am wrong.

        Same applies to other channels like PBS and Met broadcasts or BBC programs or “The Audition” documentary that I mentioned. BTW – I did check, and PBS only shows 5 of its many Great Performances on its website.

        Maybe if this new service gets some “on demand” mechanism you mentioned by which it can charge money for copyrighted material.

        This is purely academic, I have no intentions to replace my TV with watching stuff on computer.

        • Kitty: I’m not planning on watching on my computer either. I connect my computer video output (or other internet video device) to a video input on our television. It’s the same as cable/satellite without the cost and it’s on demand.

          Soon all broadcast outlets will be streaming on the internet or they will lose audience.

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