Tuesday, April 8, 2014

That Dreaded, Long-Awaited Letter

I refer, of course, to the one from the IRS.

I just knew it had to be about last year's tax filing, not the least because I haven't even filed for this year yet. I just don't every year, as a matter of principle, until April 15th. I will sit down and figure them early in the year. I need to know what I owe, if anything, so I can budget. But file? Nope. The principle involved? Avoiding an audit. Statistically, random audits happen by selecting a certain number of returns received each filing day, and that number goes sky high as the returned postmarked by midnight April 15th pour in. My odds of being selected for random audit go down.

Then too, I plan to hold on to that $140 still owed as long as possible.

There are other audits as well, like the ones triggered by an unusual return. I had one of those last year. It was a rough year. No, it was great in so many ways, but not financially. I claimed a business loss. Everybody knows the IRS hates those. It's a red flag waving in front of the tax-collecting bulls.

I could do it nearly every year. My legal deductions are more than my income. Two things have changed. The mileage rate has gone way up, and I drive an inexpensive, fuel-efficient car as these things go, and I put a hell of a lot of business miles on it. Plus a few years back the company I contract with had decreased the percentage commission it's willing to pay us, so the income has dropped, even though I have increased my working hours to 12-14 per day. (Good thing I don't drive a big truck, or that would be illegal!)

When I figure my taxes, first I figure out the real numbers. That usually brings my taxable income down to near or below zero. Then I go back and change it, moving miles from "work" to "commute" to bring my paper income back into the plus side of zero. Now, not only do I pay income taxes on it, I also pay FICA. After all, I do plan on retiring just as soon as I can afford to. That means age 70 where I can get maximum payout, still quite modest, or win the lottery, whichever comes first. Yeah, I know: 70.


Frankly, I'm getting tired.

Last year I actually claimed the loss. I paid plenty of taxes anyway, having pulled tens of thousands out of my IRAs to pay for the Arizona house, making them taxable. (Still a good deal on the short-sale house.)  Then pulled more out to pay for a couple major repairs on the house. I couldn't afford to bump up my tax debt. As it was, I figured a refund from my estimated payments of $78 and change.

It never came.

I checked my bank statements on line, waiting for that  unique number to show in the deposits column. Nada. I went on line to the "Where's My Refund?" site. All it said was they were still working on it. I tried to be patient. After all, there was that stupid sequester and even more stupid government shut-down to slow things down. But still, it never came. I quit checking often and started worrying that the delay meant that most dreaded of results: getting called in for an audit. Now, I've got the paper to back up everything, usually in a 4-6" thick folder, with the most pertinent things in labeled envelopes. But still, and audit....

This winter I checked the "Where's My Refund?" site again, but it wouldn't allow me to ask about 2012. Everything was set up for 2013. I debated asking if I could credit that $78 against the $140 I still owe this year, but decided that by now, drawing attention to the previous year couldn't be a good thing. Anyway, it had been set up for direct deposit, and changing that seemed just another way to draw their attention and raise questions.

Yesterday the letter arrived. You know that "oh-oh, now I'm in trouble!" feeling in the gut? I sat there and stared at the envelope for a full couple minutes, then decided I had to know what the news was anyway. It didn't make sense to me at first, so I read it again, and re-read parts a third time. I had made a mistake on my 2012 return. No audit, just a math error. OK, I can deal. It isn't the first time. In about four weeks, they would be sending me over $1,100!

OK, breathe again!

Hey, wait a minute: after all this time, are you going to pay me any interest on that?

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