I Suck At Taxes

Last night, Karen and I filed our taxes. Unfortunately, I suck at taxes. The tax forms that we file are not that difficult because are finances are not complicated. We both have regular jobs. Due to our son's (Braden) passing, we unfortunately did not have a dependent to claim last year.

All in all, completing our taxes should be easy because it's basically simple data entry. Every year, however, I get baffled as to the amount we either receive or owe the government. In general, it seems like everyone I know receives a large refund amount every year. So it starts to get me thinking... am I doing my taxes incorrectly? Should Karen and I finally consult with a tax professional?

It simply makes no sense to me because we really don't have complicated finances. I don't know. I know that it has been said that every year it is best to get as close to $0 as you can. I believe the logic behind that is that the tax refund or tax penalty is basically set to begin with. It just depends on whether you want to pay the taxes up front or at a later time.

By paying up front, any additional overpayment (ie. the tax refund) for the year is returned at a later time. I have heard that it is better to pay at a later time (ie. the tax penalty) due to the amount of interest that can be made on the amount that has to be paid. With our current economy and the low interest rates, that logic may not apply especially since you can be charged an underpayment penalty fee by the government. (I'd shake my fist at the government if it would help.)

Psychologically even though the amount of taxes to be paid for the year is the same, having to owe the government feels a lot worse than having the government owe you. I guess that is why I, like a lot of other people, probably enjoy receiving a tax refund every year. Unfortunately, it never seems to work out that way.

So needless to say, Karen and I were a little disappointed this year as we had a tax penalty (with the additional underpayment penalty). I know in reality, the penalty really shouldn't matter because it's all the same. But somehow, it simply irks me.