[tpmoney]

You owe taxes all year round. What you're doing in April is settling up and filing for the year. If you run your own business, you're required to pay a lump estimated taxes 3 times a year in addition to your annual filings. If you're too short, you owe and you owe interest. The IRS has a safe haven rule where if you pay 90% of what you owed this year, or at least 100% of what you owed last year, they won't penalize you. It's actually one of the reasons I personally do over withhold. I do some contract work on the side, and rather than calculating and sending in estimated taxes every quarter, I just have my regular job send in about 25% of the contracting income I expect to make. On years when I did as much contract work as I expected, I basically get nothing back or I might owe $200. On years where I don't, sure I gave the government an interest free loan but I also didn't have to think about my taxes for the whole year.

[bombcar]

Whenever these things are talked about in percentages it is worth bringing it down to dollars to make sure the effort is worth it - the average “interest” on a return is probably about $100 (4K return/2 * 5% - tax).

$100 isn’t nothing but it’s not everything either.