Just
before
the
2024
tax
return
filing
deadline,
someone
reached
out
to
me
because
he
was
facing
a
very
large
tax
bill.
I
asked
him
why
this
happened,
and
he
said
it
was
because
he
made
more
money
than
he
thought
and
apparently
didn’t
make
enough
estimated
tax
payments
or
withholdings
from
his
paycheck.
While
I
suspected
that
his
income
“problem”
could
be
better
addressed
by
a
financial
advisor,
I
thought
my
experience
assisting
people
with
tax
problems
could
help.
So
I
asked
him
a
few
questions
about
his
finances.
He
is
self-employed
but
makes
a
point
to
save
a
percentage
of
his
earnings
for
taxes.
He
also
spends
less
than
he
earns.
So
far
so
good.
I
then
asked
him
how
often
he
checks
his
bank
account
and
his
cash
flow.
He
says
that
he
used
to
check
his
bank
account
regularly
but
now
only
does
so
periodically.
He
said
that
looking
at
his
bank
account
sometimes
made
him
feel
nervous.
I
next
asked
him
how
he
calculated
his
gross
income.
He
said
that
he
downloaded
a
spreadsheet
from
his
bank
account
and
added
up
all
of
his
deposits.
I
asked
him
if
he
was
sure
all
of
those
deposits
were
income
as
opposed
to
loan
payments,
reimbursements
or
transfers
from
another
account.
I
finally
asked
him
how
his
income
tax
bill
became
so
high.
He
said
that
in
addition
to
being
in
higher
income
tax
brackets,
he
also
lost
deductions,
and
had
to
pay
the
net
investment
income
tax.
To
top
it
off,
his
new
income
made
him
ineligible
for
the
health
insurance
tax
credit
and
he
had
to
pay
back
the
subsidy
through
his
income
tax
return.
In
most
cases,
the
subsidy
amounts
to
a
few
hundred
dollars
per
month
to
cover
a
portion
or
all
of
the
monthly
health
insurance
premiums.
So
paying
back
the
subsidy
could
result
in
several
thousand
dollars
being
added
to
your
tax
bill,
usually
when
you
least
expect
it.
Since
it
is
mid-October,
I
asked
if
his
2025
income
will
be
the
same
or
close
to
his
2024
income.
And
he
said
yes.
This
presents
another
potential
problem
because
not
only
will
he
have
to
pay
the
2024
tax,
he
will
also
have
to
make
enough
tax
deposits
for
2025
so
he
won’t
get
another
big
bill
next
April.
If
he
can’t
pay
both
bills,
I
generally
recommend
that
he
pay
estimated
taxes
for
2025
and
pay
down
2024
in
installments.
On
the
one
hand,
the
guy
I
talked
to
didn’t
pay
attention
to
his
finances
as
often
as
he
should.
If
he
knew
about
his
growing
income
earlier,
maybe
he
could
have
made
some
tax-deductible
purchases
to
lower
his
tax
bill.
But
it’s
easy
for
Monday
morning
quarterbacks
to
tell
someone
to
pay
more
attention
to
how
he
uses
his
money.
But
thinking
about
money
(or
lack
of
it)
can
make
people
indecisive
or
even
generate
stress.
On
the
other
hand,
he
is
also
a
victim
of
an
overly
complex
tax
system.
He
got
hit
with
a
huge
tax
bill
because
his
income
put
him
in
a
higher
tax
bracket
and
made
him
ineligible
for
deductions
and
credits
available
to
low-income
and
middle-class
taxpayers.
No
one
knows
all
of
the
tax
rules
so
many
people
probably
missed
out
on
a
deduction
or
two.
That
may
not
be
a
bad
thing
because
if
everyone
took
advantage
of
every
available
deduction,
Congress
may
need
to
pass
new
tax
rules
similar
to
the
Alternative
Minimum
Tax.
Hopefully,
the
guy’s
unusually
high
tax
bill
will
serve
as
a
reminder
to
be
financially
vigilant.
Steven
Chung
is
a
tax
attorney
in
Los
Angeles,
California.
He
helps
people
with
basic
tax
planning
and
resolve
tax
disputes.
He
is
also
sympathetic
to
people
with
large
student
loans.
He
can
be
reached
via
email
at
[email protected].
Or
you
can
connect
with
him
on
Twitter
(@stevenchung)
and
connect
with
him
on LinkedIn.