The Red, White and Blueness of Penalties

It's that taxing time of year again and I've been spending a lot of 'free' time working through three sets of taxes.  State and Federal for 'A', mom, and myself.  Mom's and 'A's are pretty straight forward.  It's just a matter of reviewing any tax changes that came up and double checking my math.

Mine, on the other hand...
I got hit hard this year.  It's not that I make a whole heck of a lot.  Actually, in the greater scheme of incomes, mine is pathetically minuscule.  However, I made more last year than I had anticipated.  That means that I didn't pay enough in estimated taxes and will be paying a minor penalty atop the amount I owe.  The totals put a bit of a crimp in my bank balance.  At least I have some in there to pay with! (I did realize, part way through the year, that I'd be owing more than usual and saved aside as much I could in preparation.)

So, I lose a customer AND get hit for tax money all within about a week.  At least my income should drop this year, back to where it normally rests at the bottom, so next year my taxes will go down!

And while I do hate having to pay out from the meager bank balance, I hate even more the hassle of figuring out the dollar amount of the penalty.  The Feds aren't too bad about it....took only 5 minutes or less to discover that I only owed in-the-neighborhood of a $10 penalty.  The State is vicious.  It's bordering on cruel and unusual punishment to fill out the form!

It works like this: With four columns of due dates...(each line below will have 4 entries)

Line 13. Enter the date you paid the amount in Line 12 or the 15th day of the 4th month after the close of the taxable year, whichever is earlier.

Line 14. Number of days from the due date of installment to the date shown in Line 13.

Line 15. Number of days in Line 14 after 4/15/11 and before 7/1/11.

Line 16. Number of days in Line 14 after 6/30/11 and before 10/1/11.

Line 17. Number of days in Line 14 after 9/30/11 and before 1/1/12.

Line 18. Number of days in Line 14 after 12/31/11 and before 4/16/12.

Line 19. Underpayment in Line 12 X (number of days in Line 15/365) X 5%.

Line 20. Underpayment in Line 12 X (number of days in Line 16/365) X 5%.

Line 21. Underpayment in Line 12 X (number of days in Line 17/365) X 4%.

Line 22. Underpayment in Line 12 X (number of days in Line 18/365) X 4%.

Line 23. Penalty.  Add the amounts shown in lines 19 through 22. (16 figures)  Enter this amount on Form 1, line 47......

Yep, all that to find out I owed a $9 penalty.

Time to take the rest of the day off.