By Brenda Schafer MSA, CPA, CFP, EA
The Tax Institute at H&R Block

Okay, maybe it’s not as sinister as “or else,” but it is a good idea to ensure you’re paying in your taxes throughout the year to avoid 1) a big balance due, and 2) penalties and interest. However, you might be okay with paying in a big chunk of tax in April and maybe you like supporting the national budget by paying in extra money in the form of penalty and interest. Whatever!

Balance due or big refund?
Most of us, as far as I know, generally don’t want even a small balance due -- even if we also don’t necessarily want a big refund. The Pay-Go system (paying in withholding and estimated taxes as we get income) helps us meet our tax obligation for the year. It seems that Pay-Go is something that those of us who are “just” employees take for granted, and those of us who are self-employed endlessly grumble about. Sigh. I see the difference, of course. For employees, the money is taken out before one ever sees it. It’s just that much harder to let it go when we have it in our hot little hands.

Paying taxes is the right thing to do
But paying one’s taxes is the right thing to do. It never ceases to amaze me when I hear someone on TV say “I owed the IRS $67,000” or something like that. What’s with that? Dude, pay your taxes! Just so those of us who do pay our taxes can put this into perspective, let’s say you’re married, have no kids, don’t itemize, you don’t have any withholding, don’t make any estimated tax payments, and you don’t qualify for any credits. For 2008, you would have to have had almost $300,000 of income (before your standard deduction and personal exemptions) to owe $67,000! Throw in kids, itemized deductions, other deductions, credits, and everything else, the necessary income to get that big of a balance due is even higher.  It’s no wonder you can’t pay your taxes! Not!

Of course, there is the possibility that you just haven’t paid in your taxes for several years. That’s better. No wait! No it’s not! Gee whiz!

The compulsive comply-er
Enough! Yes, I know there are legitimate reasons why taxes don’t sometimes get paid on time. And I understand the competing demands on our incomes. My friends have coined the term “compulsive comply-er” to describe me. I even cross the street at the corner.

If you haven’t checked your W-4 lately, or sent in your June estimated tax payment, do it now. For me. Please? And while you’re at it, check out the W-4 withholding calculator on Digits that will help you figure out if the ARRA-related withholding adjustment will actually exceed the Making Work Pay Credit that you’ll get to claim on your 2009 return. (If it will, you may want to submit a new W-4 with an increased withholding amount. . .)

Now it’s your turn to sound off about paying taxes.