Are Quarterly Payments Getting You Down?
- posted by KLR
I have noticed that people generally get excited when they talk about paying taxes, but they get really excited when they talk about paying their property taxes. How come? The upsetting factor seems to be making the payments. I’m not so sure landowners don’t feel they are getting their money’s worth -- it’s more about the actual payments. Of course that makes me think - wow - I wonder what would happen if all taxes had to be paid the same way as property taxes; you know - quarterly.
It would mean that an unmarried person who makes $25,000 a year would need to write a quarterly check for $502.50 to the US Treasury, a check for $150.75 to the State, and a check for $478.13 to the Social Security Administration. That is $1,131.38 in tax payments every three months. That is surely more than the property tax check for this individual.
What about a married couple making $70,000 a year? That would mean quarterly checks to the US Treasury for $1,754, the State for $505.25, and the Social Security Administration for $1,338.75. Each quarter would see the couple writing checks for $3,598 and they would do this four times a year (or put another way, $1,199.33 a month)!
How about sales tax? The $25,000 single person will spend an average of $5,200 a year on consumables for an additional check to the State for $364. The married couple will spend an average of $11,700 for an additional check to the State for $819.
This does seem a lot less pleasant than having the income and social security taxes withheld from our paychecks. And paying the sales tax annually is not nearly as nice as paying a little bit with every purchase. With that in mind, we could be thankful that there is a system to make paying our income, social security, and sales taxes so convenient. Maybe someone could find a way for property taxes to be withheld from our paychecks - it would be a lot easier than making those quarterly payments.
By. Norman LeBlanc, CPA
Tax Services Group
It would mean that an unmarried person who makes $25,000 a year would need to write a quarterly check for $502.50 to the US Treasury, a check for $150.75 to the State, and a check for $478.13 to the Social Security Administration. That is $1,131.38 in tax payments every three months. That is surely more than the property tax check for this individual.
What about a married couple making $70,000 a year? That would mean quarterly checks to the US Treasury for $1,754, the State for $505.25, and the Social Security Administration for $1,338.75. Each quarter would see the couple writing checks for $3,598 and they would do this four times a year (or put another way, $1,199.33 a month)!
How about sales tax? The $25,000 single person will spend an average of $5,200 a year on consumables for an additional check to the State for $364. The married couple will spend an average of $11,700 for an additional check to the State for $819.
This does seem a lot less pleasant than having the income and social security taxes withheld from our paychecks. And paying the sales tax annually is not nearly as nice as paying a little bit with every purchase. With that in mind, we could be thankful that there is a system to make paying our income, social security, and sales taxes so convenient. Maybe someone could find a way for property taxes to be withheld from our paychecks - it would be a lot easier than making those quarterly payments.
By. Norman LeBlanc, CPA
Tax Services Group
Labels: KLR, LeBlanc, Quarterly Property Taxes
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2 Comments :
EXACTLY! My beef isn't so much with PAYING the taxes as much as it is with HOW I have to pay them. EVERY other bill I can pay electronically except, of course, the property taxes. Oh, I tried of course. I scheduled the payments in my online banking system so I would be all set for the year. After the first payment I got a bill for $10 from the city for my troubles. Apparently I hadn't included the coupon from the city with my payment. And YES, I did remember to put my account number in the check memo, but apparently that wasn't good enough. So I have to pay the old fashioned way. With 3 kids to keep track of, this has been the ONLY payment I've been late on in 10 years. My guess is they make so much extra on the late fees and charges that there's no incentive to upgrade the system.
There's a new mayor in Cranston. Seems like a pretty savy business type. Maybe I'll forward a link....
The reason that the government developed the current system of withholding taxes is two-fold, in my opinion. First, the government does not trust us to pay our taxes. Therefore, they deputize third-parties, such as employers, retailers, and real estate closing attorneys, to collect the taxes and impose liability and penalties on them if they fail to do so. Cheaper than actually hiring more IRS and Division of Taxation employees. As Congress properly figures, if the taxes are not withheld involuntarily, a significant portion of the taxes will never be paid. Tough to chase down that many tax scofflaws. With real property taxes, the government can always take the real estate away from the owner if he or she does not pay, and then sell the real estate to collect the money. This does not work for payroll and purchases.
Secondly, and in my opinion more importantly, is the idea that if they nickel and dime us and take a little out of each paycheck and with each purchase, we never realize how much it adds up to. If the average taxpayer actually understood the full amount of taxation he or she is subjected to on a daily, monthly and annual basis, we would have a major tax revolt in this nation. The current systems is very effective at hiding the real amount of taxes we pay.
Norman, thanks for pointing out all of this. Once again you show great insight.
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