Gadget Man is in sales and works on commission (with a decent base salary). This means it is really difficult to know how much money will be coming in from month to month. The good news is, Gadget Man had his best year ever. The bad news is, we paid a whole lot of money to Uncle Sam. The really bad news is that we owe a lot more. I mean a lot! Thousands. My Turbo Tax didn’t calculate a penalty for owing over a thousand dollars. Sorry Turbo Tax, but I didn’t trust you. I assumed that we’d have to pay some kind of penalty.
Gadget Man wanted me to hire an accountant. Being the frugal do-it-myselfer that I am, I just couldn’t stomach the idea of paying someone money to tell me how much money I owe “someone” (U.S.A.) else. Soooo . . . I did the unthinkable. I called the IRS at 1-800-829-1040 to ask for advice. Guess what? I got it! They asked me a bunch of questions about 2006 and 2007. Ultimately, if I understand it correctly, because our withholding for 2007 was more than 110% of the taxes we paid for the previous year, we fall under the “Safe Harbor Rule” and no penalty is assessed. Of course, I documented the names and employee id numbers of all the representatives I talked to, just in case there is some kind of problem down the line.
After a mere 30 minutes on the telephone, I hung up with an actual answer from the U.S. Government. Furthermore, the people at the IRS were very, very nice. Who knew? The moral of the story is, if you have a question about your taxes, you can actually call the IRS and get an actual answer.