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.

11 comments:

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...

...wow.

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...

Sycorax:

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.