The world is divided into two kinds of people: those who file their taxes by April 15 and those who file for the automatic extension to August 15.
Count me in that latter camp.
You still have to pay by April 15, you just don’t have to finish the return until August 15. So, like many, I send in “more than it could possibly be” along with my Form 4868 Automatic Extension to File on April 15th each year . . . but go light on my first quarter’s estimated tax, which is also due April 15. Then, when I finally figure out how much too much I sent in with Form 4868, I apply that to the following year’s tax.
Meanwhile, whether you file April 15 or August 15 (August 16 this year, as the 15th is a Sunday), the world is divided into two kinds of people: those who have to make quarterly estimated tax payments and those who don’t.
Estimated tax payments are for those who have significant income other than wages (on which tax is withheld automatically). Say you’re self-employed or you get lots of interest income or you realize a big capital gain — sorry, Bud, you have to send in estimated tax payments by April 15, June 15, September 15 and January 15. It’s fine if you overpay in any quarter, but if you underpay, there will be interest and penalties.
And the same for most states.
The world, I might add, is divided into two further kinds of people: critics, who (with the exception of Janet Maslin) did not like the Star Wars prequel and audiences, who did.
But I digress.
Oh, wait — and here’s the good news. Taxes are down! At least for families with kids. According to my friend Jane Bryant Quinn’s Newsweek column a couple of months back, a family of four earning the median wage ($55,000) will pay 7.5% of it in 1999 federal income tax — the lowest level in more than 30 years. A family that earns twice the median is expected to pay tax, on average, of 14% — the lowest level in 27 years. And a family of four earning half the median would pay nothing but, rather, get 1% from the IRS, thanks to the earned-income credit.
What’s more, as Jane so aptly concluded: “Freedom from taxes isn’t paradise. It’s Cambodia. … It’s any country that cannot afford the social and physical infrastructure on which prosperity is built.”
Quote of the Day
He is richest who is content with the least.~Socrates
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