Personally, I prefer to owe a little bit of tax. Paying a small amount means that I've had full use of my own money for the entire year. Getting a refund means the government has had free use of my money for the previous year. I am happy to write the IRS a check on April 15th each year.
Of course, it is important not to owe too much. Otherwise, one has to pay penalties and interest. One can avoid the penalty if one paid at least one of the following amounts:
- 90% of the tax shown on one's 2007 tax return.
- 100% of the tax shown on one's 2006 tax return (110% of that amount if one is not a farmer or fisherman and the adjusted gross income (AGI) shown on that return is more than $150,000, or, if married filing separately for 2007, more than $75,000).
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This is not financial or tax advice. Please consult a professional advisor.
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