DISCLAIMER I am not a tax professional and this diary involves things that will require consulting one before attempting. Also, see liberaldregs comment below as I originally had a number wrong
It's tax time again. Some people will owe more than they had been paying. Some people don't have estimates taken out of their check and make quarterly payments. Whatever the situation, everyone pays something. We are progressives here so we don't mind paying taxes in exchange for government services. But if money is tight you might be tempted to pay taxes with a credit card or bank loan. Don't do that, here's why. I was a professional gambler for a while. I won't go into details. Long story short when it comes time to pay taxes the situation is complicated. But something that isn't as complicated is a saying among successful professional gamblers:
Uncle Sam loans cheap.
Follow me down to section 1a of government form O-Squiggle to proceed.
Let's start with a link to the IRS website.
Look at #4. Now look again. Here let me highlight that for you:
you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes.
No, that's not a typo. Assuming you file on time and pay what you can and send a nice letter explaining things and consult a tax professional which I am not but you can probably find for free you will pay the IRS an interest rate of 0.5% instead of the 10-25% or whatever you would pay on a credit card.
EDIT: As comments have pointed out I was mistaken about the 0.5% number, it is likely closer to 4% and still a much better deal than any bank anywhere
There are a number of other options for using the money you pay in taxes wisely. Here are some of them: http://finance.yahoo.com/...
So, what's the catch? Well, if you don't file or you don't pay what you can or you don't send a nice letter or you don't consult a tax professional then you might end up owing a lot more than 0.5% and the IRS can come after you in ways that give Jamie Dimon wet dreams. So this is serious business. But as long as you treat it like the serious business it is you can borrow money from your uncle sam legally and with very modest penalties compared to what you would pay a banker.
I hope this helps someone. I want to say again that I am not a tax professional and when I did this I had a CPA from Nevada who specialized in gambling tax returns working through it with me. I also want to thank this diary for turning me on to VITA who did my taxes for free this year, got me a bigger return than last year and introduced me to a couple local financial services that I might take advantage of.