On Saturday our income tax refund landed in our checking account. It was significantly higher than I’d anticipated which freaked me out a little bit when I saw it.
I opened H & R Block At Home 2009 and calculated the difference. It was exactly $664 which I recognized as the amount we’d paid for our quarterly estimated taxes.
When I was talking with our accountant, I asked her if I was supposed to apply the estimated payment I made in January to 2009, or was I supposed to count it for 2010? After all it was paid in 2010. However, it was for the time period of October through December, and due to be paid by January 15th.
She said I could do it either way. I could count it for 2009 or 2010.
But she was wrong. At least the IRS decided that was wrong, because they refunded that money to us.
Now I already calculated our estimated taxes based on having paid $664 in January. I calculated that we need to pay $568 in estimated taxes, broken down into quarterly payments that’s $142 each quarter.
It is difficult to figure out exactly how much money Mr. A will make from his businesses so it’s hard to know how much we should pay. I just know that last year our refund was over $2000 due to paying $664 per quarter so I didn’t want the government having all our money again.
I’m worried that we will owe more than $1000 if we don’t make this payment.
Here are the options I came up with:
- I could make an additional payment to the IRS right now of $664
- I should at least calculate the net of Mr. A’s income thus far and see if that’s necessary
- I could put the money into savings and wait until the year is over, then calculate and pay a lump sum payment in January, building some interest on that amount in the meantime
- Mr. A suggested we use the $664 as a debt snowball toward one of our credit cards
I was leaning toward putting the money into savings until Mr. A suggested we put it toward the Discover card and get that completely paid off.
What would you do?