5 ms·

100% agree. To me they seem to be playing this perverse game of knowing how much you owe based on your W-2s then not telling you, waiting for you to file and gu

• tomjakubowski 7y ago
  When I've guessed wrong, I've also been rewarded with unexpected large dollar figure checks in the mail. I did once make an error that cost me, and someone at the IRS was excellent in working together over the phone to get things square.
  • rdtsc 7y ago
    > I've also been rewarded with unexpected large dollar figure checks in the mail. But did they also send any interest? Notice if you owe them, you also owe interest, unless you negotiate. If they owe you, you don't usually get the interest sent do you.
    • philwelch 7y ago
      If you get a tax return at all, you've essentially given the federal government an interest-free loan all year.
      • rstupek 7y ago
        And most people think of that money they get back as a bonus! Like it was never their money in the first place but a gift from the government
        • ceejayoz 7y ago
          For people who aren't good at budgeting/saving, it can be a decent way of putting away money for a large purchase or two every year. It's a lot easier to raid a savings/retirement account than to get your IRS refund six months early.
          • philwelch 7y ago
            People aren't terrified of plundering their retirement accounts? There are massive and scary tax penalties if you do....
            • ceejayoz 7y ago
              10% isn't that massive or scary for someone facing something like a big unexpected medical bill or whatnot. "I can take out $2k to fix the flooded basement and it'll cost me $200 in penalties? OK."
              • philwelch 7y ago
                But that’s on top of whatever income taxes you didn’t already pay in some cases.
    • perl4ever 7y ago
      Yes, they pay you interest. That's from personal experience, when they returned money that I did in fact owe, because it was outside the statutory limits of how far back they can collect. It was literally a few dollars and a few days, and they paid interest.
    • Renevith 7y ago
      I'm not sure if this is the exact situation you're referring to, but you do get interest sent to you if you later amend a tax return in your favor. Source: I've filed a 1040X twice, both times in my favor (due to my own mistake I noticed on my own later). The IRS issued me a 1099-INT the next year for the interest they paid me. The rate was substantially above market!
• creato 7y ago
  The "penalties" are just what you owed plus interest. I think the IRS will only charge an actual penalty if they think you were deliberately trying to avoid taxes.
  • naravara 7y ago
    I haven't run afoul of the IRS, but my state tax collection agency didn't even bother notifying me of underpayment, they just sent my account straight to collections to have me hounded by debt collectors. After contracting with a lawyer we determined that not only had I paid my taxes that year, I had OVERPAYED and the state actually owed me $500. When I resubmitted a corrected form for the state tax assessor, they sent me a letter saying the time-limit for requesting a refund for that year had passed and I could go kick rocks. Experiences like that aren't unique and are enough to put lots of people off trusting the government to be on their side for resolving disputes like this. Most people don't separate out their state or local authorities from the feds. It's all just "government" to them. And even the IRS can make life extremely stressful by auditing people who aren't all THAT rich to begin with (because people with real money have lawyers who make it expensive to go after them). I, personally, think the solution is to make the federal (and state) bureaucracy more service oriented rather than treating everything like a punitive law enforcement role. But apparently not many people agree.
  • russh 7y ago
    Unfortunately, the IRS includes ignorance in their definition of deliberately.
  • rdtsc 7y ago
    > The "penalties" are just what you owed plus interest Sure, interest after 6 years can accumulate into a nice penalty sum on top of what is owed. If IRS ends up owing you, and they discover it 6 years later, would they send you the refund with an interest as well? I am guessing they won't.
    • astura 7y ago
      I once filed taxes late (filed like 2012 taxes in early 2014) and my refund included interest, I think it was sent in a second check. They also sent me some form the year after that so I could declare the couple dollars interest I got from the IRS as income.
• coldpie 7y ago
  Have you actually gotten a penalty? The IRS is just interested in gathering its taxes, it has no interest in punishing you. You have to mess up pretty hard and/or deliberately to get the IRS on your case.
  • hexeater 7y ago
    I have gotten IRS penalties/interest due to my incorrectly reporting. I was confused about how to report RSU and Stock Option income, and then I was doubly confused about how to do quarterly filings. I am REALLY trying to do this on my own without an accountant. I think I got it right with 2019, but I will find in a few week how far off I am when I try to file. I'd say my interaction feels like the IRS is just painting by numbers - they are just running the numbers and checking if you filed correctly or not. If you did not and the number is significant, they send you a letter.
    • iudqnolq 7y ago
      A trick for when you're trying a strategy you aren't sure of: you can overpay the IRS by the amount you would pay if the exceptions you are pretty sure apply actually didn't. They will return the extra to you, and you lose the interest that money could have earned but gain the knowledge for next year of whether you can or can't do what you wanted to try. Depending on your specifics might be cheaper than a tax adviser. Disclaimer: YMMV, I'm not a tax advisor, I pulled this out of my * * *, etc.
    • deleted 7y ago
      [deleted]
  • rdtsc 7y ago
    6 years later you don't just get to pay what you owed. There is interest to be paid as well. You can negotiate sure, but they could have just sent a pre-filled form saying "based on W-2 and what we already took out, here is how much you owe us, if you agree, sign, send the check and return it" or even better do it online.
    • 7y ago
• throwaheyy 7y ago
  I'm not an American but I've been doing US taxes for 10+ years. There's never been any guessing involved. What were you trying to guess? I've underpaid precisely once, when I didn't know about qurterly reporting, and the so-called "penalty" was nothing unfair -- just the interest the money earned in my account instead of the IRS's.
  • jlarocco 7y ago
    I don't know what the OP's "guessing" comment was about, but the whole process is asinine. The IRS already knows the numbers on W-2 forms because they get the same data from employers. Financial institutions also send them 1099s and other forms. So the IRS already knows all the numbers. There's little point in making people manually re-enter the data. The IRS should automatically fill in everything it knows about, and then let people add deductions and unreported income if they need to. It would make filing taxes almost a no-op for a lot of people.
    • altoidaltoid 7y ago
      Doesn't matter. The pain and anguish is the goal. I have heard multiple commentators/politicians ( mostly GOP ) state that they want taxpayers to have a negative experience when it comes to paying taxes.
    • nightski 7y ago
      I believe that Americans in the past and maybe even today have preferred the freedom of doing things independently of the government. While it is true the government receives all reported income, it is not true that they know about all your deductions/expenses. While many Americans are oblivious to such things in general the government gives you control over your own taxes. In reality, it's a small amount of responsibility and lets a person take ownership of the process. It is NOT difficult at all, especially for W-2 with the standard deduction. The whining in this thread is ridiculous imho. The one time I underpayed I promptly received official letters from the federal and state governments giving me time to pay them with a very minor penalty (it was well under 1% due to the short time frame). It was simple and easy. Ironically the Trump tax cuts made this even easier as the standard deduction was doubled making it much less attractive to itemize.
• jandrese 7y ago
  As an average Joe it seems like it can be pretty much impossible to figure out the rules in any number of corner cases. For example. I'm considering installing Solar Panels on my house. The entirety of the official IRS guidance (in the manuals) is this: "Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. The home doesn't have to be your main home." So of course the first question you ask is "Ok, I have to fix my roof to install solar, and that appears to be covered. But does it only cover the part of the roof covered by the panels or does it cover the entire roof job? Does it cover the costs of only a basic roof job or a premium job? If it only covers the portion under the panels what is the procedure to prorate the costs?" It wasn't clear to me so I called the IRS help line, figuring that this is their job. They are the ones that ultimately decide one way or the other if my deduction is valid or felony tax fraud. The official guidance from the help line is "We do not offer guidance on that issue." The money we are talking about isn't trivial either. It can amount to thousands of dollars, guessing wrong could theoretically mean actual jail time or massive fines if someone at the IRS decides to make an example of you. Like WTF IRS. I'm trying to do right here and you're literally making it impossible.
  • philwelch 7y ago
    It may be worthwhile to consult a tax attorney. The IRS help line is just a help line, they aren't tax attorneys and they can't give legal advice, which I think this qualifies as. I'm not a tax attorney, or an attorney at all, and so this isn't legal advice, but IME if you make an honest mistake, the IRS will usually send you a letter informing you of this and you'll get a chance to make it right.
    • jandrese 7y ago
      Interestingly enough, I've heard conflicting advice from different tax attorneys on this, which is one reason I was trying to research it myself.
• logfromblammo 7y ago
  They'll tell you, if you file a FOIA request. But then the documents they send are poorly documented, and very difficult to extract the required information from. The documents you want might also arrive after the annual filing deadline, or never. And what they calculate for what you owe never includes optional means of reducing tax owed. So in some cases, the number you calculate for yourself can be both lower than theirs and yet still correct. If you are in a business that includes a lot of cash transactions, or have to report additional income from sources that do not automatically report on a 1099 or w2, a FOIA request should be able to tell you what the IRS already knows about, and can prove that you earned. That will allow you to calculate how many patriotic brownie points you will earn for reporting those sources that aren't already noted in your file. As with many things related to government administration, be warned that if you choose to play stupid games, you might win stupid prizes.
• Shivetya 7y ago
  W-2 would be an end all if not for deductions which can change throughout the year and do not apply equally to all tax payers. the raise of the standard deduction; doubling; in effect made deductions simpler for many and transferred wealth back to those earning less