I’m guessing the interest payments discrepancy is something they can flag algorithmically (or it should be at least) since it should be a simple check between what you reported and what banks reported to the IRS for you.
Yeah they always charge interest for underpayment. At least they did not charge a penalty in addition. Interest is basically to make up for the interest the Treasury had to pay (in T-bills issues which were north of 5% last year) to cover the tax compliance gap. Nothing too unusual there.
I think the IRS underpayment interest is only 7-8% per year. According to Accuracy-related penalty, understating your tax by 10% or $5K results in a 20% penalty. So you prolly paid $1200 penalty and $800 interest.
I do not know whether this is good news or bad news
DOGE: IRS Still Can’t Hit This 1996 Deadline, but at Least the Consultants Got Rich
When Elon Musk’s Department of Government Efficiency whiz kids aren’t busy looking for wasteful spending, they’re doing the even harder work of making government systems work better. Case in point, the IRS, where DOGE advisor Sam Corcas found a modernization program “that is already 30 years behind schedule and $15 billion over budget.”
Talking to Fox News on Friday along with Treasury Secretary Scott Bessent, Corcas described a computer system that was going out of date in the 1970s — real museum pieces to a thirtysomething guy like himself. “The IRS has some legacy infrastructure,” he told Fox, “old mainframes running COBOL and Assembly, and the challenge is how do we make that a modern system? Virtually every bank has done this, but we’re still using a lot of those old systems.”
I just consulted the “Where’s my refund” site and it says the IRS reviewed my calculations. They found an error that increased my refund by several thousand $.
I know my calculations are correct, and the extra amount tells me the IRS clerk ignored my income from TreasuryDirect.
I’m worried what will happen when they deposit this incorrect, inflated refund in my bank account. How can I return the money ASAP? Is there a way to do that? The “Where’s my refund” site has a phone number but I assume it’ll take several hours to get thru.
Any insight would be appreciated.
Dont do anything, just leave the excess exactly where it’s deposited. If they catch the error, they’ll either send you a notice or they’ll reverse the deposit. Either way, if you try to send the money back now it’s likely they wont credit it properly and they’ll still attempt to reclaim the error on their own schedule.
Just let the system do what the system does. You have a copy of the return you mailed, the adjustments are noted in their system, and (presumably) you’ll have the money sitting there waiting for them to fix their mistake. Your ass is covered.
And maybe they never fix it. Or you are wrong and there was an error.
This needs to pass under reconciliation so the Senate Democrats cannot filibuster it. That requires the bill does not increase the debt over a 10 year period.
Even though I live in high tax California, they should keep the $10,000 state and local tax deduction limit. The Democrats are the party of the wealthy so their voters should understand the consequences of their choice.
All I see is tax cuts beyond the current tax policy. The current policy is already deficit-inducing at the current tax brackets.
How is this proposal not going to be even more deficit inducing over 10-years to pass via reconciliation? Should this come with mandated spending cuts to make up for the lower revenues?
In general, I think raising SALT is not a step in the right direction. High-earners are the one overwhelmingly likely to itemize (large mortgage interest, real estate taxes, etc…). Not only that but the value of the deduction is greater for those in the 37% tax bracket than those in the 22% tax bracket. So raising SALT limit seems to me to make the tax code considerably less progressive that it currently is.
Also, since raising SALT deduction limit would lower tax revenues, it’d need to be balanced by additional tax revenues elsewhere (or actually reduced spending but yeah … good luck with that). So that increase should fall on the upper income earners as well to keep the tax code progressive, maybe in the form of marginal rates being bumped for those in the 24-37% brackets.
Otherwise, it’s yet another tax cut unpaid for and one that disproportionally favors the wealthy.
The wealthy voters in the California coastal cities vote overwhelmingly Democrat, giving them complete control of the state. This includes tax policy, such as California having the highest income tax rates in the country, except for Hawaii. Also burdensome building codes and regulations, making it harder to build more real estate therefore higher prices.
So they and their representatives did not vote for the SALT deduction limit, but they voted for higher state taxes. The Republicans in the Congress voted for the deduction limit, so the wealthy voters in California pay their fair share of federal taxes despite their self imposed state taxes.
This sounds true, but do you have data to support this? Certainly the higher density cities vote Democrat not only in California, but everywhere. I just don’t know and can’t find anything that shows how the California coastal wealthy voters vote. One George Clooney does not make a statistic.
