Friday, July 08, 2011

The life of the mind owes back taxes

I underreported my income on my 2009 tax return. It was money from an external research fellowship, and I both realized and didn't realize what I was doing.

When I'd had fellowship income in the past, I'd tried to report it but had nearly always had a difficult time doing so: I wouldn't receive tax forms from the granting institution in January, and when I'd call they'd persist in not sending me tax forms. Twice I was referred to an office with a phone line that was never attended and on which I couldn't leave a message. Upon digging through my award notifications, I would also find ambiguously-worded statements such as, "this may or may not count as income and may or may not need to be reported to the Internal Revenue Service."

Nevertheless, I dutifully but half-assedly reported the income. Since I hadn't received a 1099 form, I didn't have a tax I.D. number or a proper address, but I listed the dollar amount and some version of the institution's name. And every time, I owed a chunk of money for my pains.

Based on this lackadaisical institutional reporting, I more or less came to the conclusion that fellowship income must not really need to be reported. The institution that awarded me a fellowship in the winter of 2008-09 also did not send me a 1099 form, and this time I didn't bother to try to track one down. Their checks and check receipts had suggested that they were deliberately underreporting what they paid me, so I figured that if there was a tax loophole here, they were definitely taking it.

Also, it was a decent amount of additional income. I would have owed hundreds of dollars rather than getting back hundreds of dollars. So I didn't report it.


When I got the notice of underpayment from the IRS this past spring, I acknowledged its justice: I owed $1,000 in back taxes, plus $37.00 in interest. I wasn't happy about it, but I knew that I was the one at fault. I called the IRS immediately to see whether I could pay in installments over the 90-day window I was given. They told me that I could, and I wrote a check for $350.00 that night.

But it didn't turn out to be so easy. The Treasury Department has been cashing my checks and then, a week or two later, cutting me checks for the same amount (plus interest!): "OVERTAX REFUND," they tell me. I kept sending them checks, for increasingly large amounts, until last month I paid the full $1,037.00 in one lump sum. Last week I got a letter by certified mail telling me that I was delinquent in my repayment. I called, and was told that it was probably an error, since my account had been credited. Yesterday I got a refund check for $1,037.91.

Graduate school did nothing to prepare me for this.


Sisyphus said...

That's funny. And horrifying.

Your name isn't Joseph K by any chance?

Flavia said...

Sis: my lawyer has been consulting with his lawyer. I'm sure this will be settled in no time!

heu mihi said...

I'm trying to think of a clever joke here, but I think that the IRS beat me to it.

What Now? said...

Good heavens -- this is the stuff of bureaucratic lore. I wish you a speedy resolution to all of this.

Susan said...

What's that about the left-hand not knowing what the right hand is doing?
Just in case you haven't figured this out, I'd call them before I deposited the check!

Renaissance Girl said...

You know I'm sweating the next year's filing. No 1099 forms around here, but I'm screwed.

Flavia said...

RG: you know, I was thinking of you after I wrote this--you must have a bazillion sources of income to report a year, sometimes in smallish increments.

Do you have an accountant? We're totally getting one for next year (marriage + home buying + income in two states = more than Turbo Tax can handle).

Dr. Virago said...

I know this is probably infuriating to you, but for some reason I'm laughing here. Sorry it's happening to you, but OMG, too funny!

Sycorax Pine said...

I don't know, in some ways that sort of bureaucratic despair is *exactly* what grad school prepared us for. (Or, er, was that just me?)

Flavia said...


Ha, unmasked!

Bureaucratic despair, yes. Ability to solve complicated problems involving numbers, no.

Anonymous said...

You've probably resolved this by now, but if you haven't, I highly recommend contacting an accountant. A few years ago I had a similar, though less-Kafka-esque, experience with the IRS. It was amazing how quickly the accountant was able to resolve it. She didn't even charge a dime for it, but she's had my business ever since.