Laura Saunders has written the Journal’s Tax Report for a long time, and this weekend she does something she has never done: she announces that she is going to owe the IRS next April on purpose. “My motivation for avoiding a refund is fear of a snafu or delay that takes precious time to resolve.”
The fear is documented. Between January 2025 and January 2026 the IRS lost 31,000 people, nearly a third of its staff, according to the Treasury inspector general and the Government Accountability Office; it answered a smaller share of calls with longer waits. The National Taxpayer Advocate’s June report describes a “growing divide” between filers whose problems fit the automated systems and those who need a person. Richard Weiss, a retired finance professional near Washington, e-filed in February, is still waiting for a five-figure refund, and says of the number the IRS gave him: “I call it day after day after day, and I can’t get through.” The IRS says over 90% of refunds went out in under 21 days and it sees no widespread delays.
The rules, for people who would rather owe
Owing is a needle to thread. Overpay and you have lent the government money at zero percent — last year nearly two-thirds of 166 million filers did, an average of $3,167 each. Underpay and there is a penalty, which is really an interest charge, currently 7%. The rules for avoiding it:
Pay 90%. Anyone who owes $1,000 or more must generally pay 90% of the year’s tax before April 15, through withholding, quarterly estimates or both.
Or use the safe harbor. Pay 100% of last year’s tax — 110% if your income is above $150,000 — in equal quarterly installments, and there is no penalty even if this year’s income balloons. Saunders’s example: a filer who owed $40,000 for 2025 pays $44,000 this year in installments, then has a windfall that lifts her 2026 bill to $90,000. No penalty. The safe harbor cuts the other way if last year was the big one: a $90,000 year makes this year’s floor $90,000 even if you will only owe $40,000.
Beware the timing trap. The IRS assumes income arrives evenly across the year. A Roth conversion or a big fund payout in the fourth quarter, with the tax correctly paid then, can still draw a penalty from a system that thinks you were late for three quarters. Schedule AI of Form 2210 fixes that, tediously.
The move every retiree should know
Here is the paragraph worth the whole column. The law treats withheld tax as paid evenly through the year regardless of when it actually was. So an employee with substantial dividend and interest income can raise paycheck withholding to cover the investment tax and skip quarterly estimates entirely. And a traditional IRA owner can wait until late in the year, when income is known, take one large withdrawal, and have as much tax as needed withheld from it — covering everything, including investment income, with no estimates and no Schedule AI. Saunders plans to do exactly this when she retires. So do a great many of the people this desk sits with, once they learn it exists.
Our read
Eric Korbitz, a Milwaukee CPA with four clients still waiting on refunds, gave the Journal the line: “It’s often a lot easier to owe the IRS than to have them owe you.” The year-end planning season starts now, and for anyone with a required minimum distribution coming, the December-withdrawal-with-withholding move is the cleanest tax mechanism in the code. Set the withholding on the IRA distribution so the April bill is small and positive, and the refund line becomes a number you never have to chase.