I Want To Owe Taxes

I know many people prefer to get a large refund when filing a tax return. For some, the tax refund is a great way to force savings or to get a large yearly lump sum to use. The refund can be used for paying bills to paying for a large purchase.

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:

1. 90% of the tax shown on one's 2007 tax return.



2. 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).

For our 2007 tax return, I expect that we will owe money for both the Federal and state tax returns. However, since we paid at least the amount in #2, we shouldn't owe any interest or penalties. While it is painful to pay taxes when filing a return, I find comfort in knowing that I had full use of my money through out 2007:-)

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This is not financial or tax advice. Please consult a professional advisor.

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