My mother said this to me after I frantically texted her about not getting my refund this year.
Some background: My 2014 tax return (filed last year) left me owing the government a lot of money. For the first summer of my internship, they didn’t take taxes out of my paycheck. It made for a great bank account, but no one told me what that really meant. When you get a 1099 from your job instead of a W-2, like most people, it means you are going to owe (most likely). They make you pay what’s called estimated taxes if you know this in advance, which means you make payments every quarter. If you pay too much, you get a refund. If you pay to little, you owe. I was unaware of this that lovely summer of 2014 (as was my mother). What I should have done was save the amount I was going to owe (after some estimated tax calculations) so that I could pay it all by the time I had to file.
After filing and seeing the amount I owed, I panicked, then calmed down enough to set up an installment agreement. It would take a while, but I would pay it off.
Some foreground: This year (two weeks ago), I filed my taxes again, and because my internship switched to a W-2, I was getting a huge refund! Was. Apparently, even if you have an installment agreement set up, when you owe the IRS money, they apply whatever amount necessary from your refund to that balance. I called to see if I could at least get some of it, so that I could, you know, LIVE (because my work study jobs do not pay very well), and they basically said no. They also informed me that I owed more than I thought I did because of interest and fees.
THIS IS NOT A LOAN. WHY are they charging me interest?! I’m trying to focus on the (bleak) positive: I’ll be done paying it off in the next few months, but the fact that I will be living off of Ramen if I’m lucky until graduation is just so upsetting.
I know this post is a little ranty, but what I’m really trying to say is:
Learn how to do your taxes correctly. And understand what the amounts mean and how they were calculated.
Don’t just let your parents take care of it for you every year (I only let my mom do it the first time), because when it’s your turn, you will know nothing.
Pay things off as early and as in full as possible. This is a tip for any debt, not just taxes owed. *cough cough student loans cough*
Maybe this time next year I’ll write a very boring yet informative post about how to do your taxes. I feel like it’s a skill not enough twentysomethings have.