When we sit down to take stock of what last year was like and what we're going to do this year. No, I'm not talking about New Year's resolutions but TAX TIME. It really is amazing that Americans for the most part willingly (not happily but willingly) gather together all the information needed to establish their tax liability, either compute or assist in computing this liability, then notify the government of the results. Most of us do it with a little bit of pride in our country and a sense of duty but I suspect there's a significant portion of fear of the negative consequences were we not to be so compliant.
For that reason, I was amazed at the article in the Sacramento Bee recently saying that 600,000 Californians have yet to file their 2004 tax returns. The state estimates that as much as $6.5 billion has not been collected from 2004. Even though they're going to be offering total amnesty (no penalty or fees) for those who respond to the first notice by paying their state taxes, the state isn't expecting to get the full $6.5 billion. They say they'll be happy with $3 or $4 billion.
I am certainly grateful for programs like TurboTax which take much of the pain out of preparing the tax returns. It's also nice that with the move to Sacramento and reducing our investments there, the complexity of our tax returns has gotten dramatically less.
Unlike many people, I try to have just enough taken out of my regular paychecks so that I have to pay come tax time. I don't want to feel like I've given Uncle Sam an interest free loan. I'd rather withhold less, put the difference into the credit union, and collect interest while waiting for April to pull it out to pay our taxes. But of course that means I'm always pushing the point where we incur a penalty for under withholding. Also I'm tempted to wait until the last moment to file the return since the cost is the same on April 15 as it is on February 15.
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