How to celebrate the anniversary of screwing up your taxes: Do it again

"We have a letter from the IRS saying we owe them money!" is not what you want to hear when you pick up the phone to answer a call from your spouse.

Ten years ago, the first year we were together, David and I managed to short the IRS to the tune of three grand and unexpectedly owe it all come April 15. The culprit was W-4 confusion: We both checked "married," not realizing that would set our withholdings as if we were each married *and* the family's only wage-earner. Throw together two salaries and a higher tax bracket and you have an expensive oops.

Since then, I've been pretty meticulous about the taxes, and we traditionally come in for a hefty refund. (Yes, intentionally -- we both would rather use the forced savings of overpaying the IRS than cut it close and end up owing. I realise that's financially foolish, but so far, the money I'm "losing" this way isn't enough for me to care.) This year's refund landed in my bank account just three days before David's panicky phone call.

It turns out what we owed money for was our 2008 taxes. "The income and payment information that we have on file does not match entries on your 2008 Form 1040," the letter sternly informed me.

"Calm down, wait till I get home, and I'll go through the records," I told David.

"Please give the IRS money so nothing bad will happen!!!" he replied. I admit, I shared a bit of the panic -- stiffing the IRS sounds like one of those things the federal government takes a very dim view of.

The form had one slightly reassuring line in it, though. "If this information is correct, you will owe $508," it said.

Okay. Suddenly owing $508 is no fun, but it's not like we were being told "cough up $10,000 and prepare for a stint in the debtors' gulag, and by the way, we're now gonna audit EVERY FORM YOU'VE EVER FILED WITH US, you untrustworthy tax-dodging leech."

The letter's "summary of proposed changes" showed two income payments unaccounted for on my 2008 taxes, but apparently very accounted for in documents the paying parties sent on to the IRS.

The first was $1,200 from Time Inc. for freelance work I did before I joined the staff, and for which I'd been paid on a 1099. When I went back in my records, I realised to my chagrin that the IRS was right. The work was done in late 2007 and paid in early 2008, and I'd totally forgotten about it by the time I filed my 2008 taxes -- which I did before the 1099 arrived in the mail. I hadn't included it. Note to self: Mint.com columnist Matthew might be on to something with his checklist manifesto.

The second entry in the IRS list was "taxable dividends" of ... $13. This came from the Sharesave account I cashed out just eight months after I started, because I left the company long before the shares vested. Apparently I made $13 in interest off it. I have no idea if that's true or not -- my dim recollection is that I got back exactly what I'd put in -- but since the taxes due on $13 are about what a cup of overpriced coffee costs, I had no interest whatsoever in digging out records or trying to fight that charge.

Happily, the penalties on stiffing the IRS -- at least for the three-figure amount I did -- are completely minor. The IRS says I owe $489 in taxes on the $1,213 I underreported, and $19 for a year's worth of interest. That's it. No "pay this draconian fine so you learn to never again shortchange the taxman" fees. I'd owe more interest and possibly some penalties if I didn't pay up straight away, but if I sent the check before March 31, I'd be back in Uncle Sam's good graces.

I cut the check that night. ("I will take this to the mailbox right this second," David said, sealing the envelope as he changed out the door.) The Treasury cashed it yesterday.

And I hope to never again be a tax scofflaw. I mean, I'm pretty sure the government (current debt: $12,644,040,577,175) kinda needs the cash.

Hold breath, leap

Last time I posted, I was consumed with changing bank accounts. (I'm trying Schwab now, btw. Will report back soon on it.) Life is odd in how damn fast it changes.

We're trying to buy an apartment.

I kind of don't want to say much in case I jinx it, but if this works -- or if it irrevocably doesn't -- I'll post all the gritty details. The short version: The annual lease on our apartment runs out Feb. 28, and we'd planned to move. I **loathe** moving, but after five years here, I can't pretend any longer that two people, two cats and 2,000 books fit into a glorified studio with one (ONE!) closet.

I grumpily started scoping out rentals. I pretty much assumed that these days, if you can't put up 20% for a downpayment (and in NYC, that means six figures), you're toast. But one of my friends recently bought a house (in Baltimore) with an FHA loan. And I'd been hearing about various Brooklyn condos getting FHA approval. So I did a bit of poking around -- and found, much to my shock, that it has suddenly become a somewhat viable option.

You lock yourself out of most listings if you need to go the FHA route. I'm told getting approval for single family houses is very hard (many still exceed the loan-size caps, even though they've been raised), and you flat out can't do a co-op, which is what vast swathes of the NYC apartment market are.

But there's a half-dozen high profile Brooklyn condo projects that now have the fast-track FHA approval. And there's one I'm really drawn to. And we found a unit in it that is really, really intriguing for us. And I spoke with the building's preferred lender, and he gave us the green light for a loan with his bank. (5.5% interest! at worst! he thinks maybe less!)

So after two days of incessantly banging on my HP 12-C to work out all possible fees, contingencies, etc ... we're about to ready to put in a bid.

EEK. This feels like jumping off the high diving board.

Silicon bonanza

Twenty years ago right about this month, my dad went out and bought our family's first personal computer. It was an Apple IIGS, and ours was the first family I knew of with our own computer. I recall it costing around $2,000.

My sister and I loved the new computer. It arrived just in time for me to hit middle school and start having papers to write, and I still can't fathom how anyone did that before electronic word processing. My family also had an electric typewriter, which I think I might have used to write precisely one school paper, but even then I had the sense that typewriter was more of an archaic novelty item than an actual functional tool.

The IIGS was eventually joined by a Mac (nominally bought for my Mom to use for her business, but Lisa and I mooched it frequently), and when I went off to college, I spent all my savings buying a Mac laptop. It had a 500MB hard drive and cost me about $1,000.

Not long after that, my sister got a first-generation iMac, and thus began our era of everyone in the family having their own PCs.

Since that first college Mac laptop, I've run through more computers than I can count. (In several cases, the line between what was 'mine' and what was my job's computer has been fuzzy -- starting my sophomore year of college, I had a school-issued laptop for my Residential Computer Assistant gig, which I basically used as my own personal machine as well as for work stuff.) But for the past decade, one split has been clear: I have my computers and David has his, and the two sets stay very separate.

Some of this comes down to preference. I like desktops, and by the end of college I'd made the switch from being an Apple fan to preferring Windows. (Yes yes, I know, this makes me an inferior human being. Trust me, there's nothing you can say on this that David hasn't already.) David strongly prefers Macs and laptops. So as soon as we had the spare cash, he went out and got his own MacBook.

This popped to the front of my mind right now because my current desktop has been showing signs of impending death for months. It's only the second desktop I've had since 2002, and I got about four years out of it, so I can't complain too much about having to upgrade. I took the early Windows 7 reviews (the general tenor seems to be "well ... it's waaay better than Vista ... and seems to be actually ok ...") as a sign that I should finally let go of Windows XP. So, sitting on my living room floor and waiting to be installed, is a new HP Pavilion desktop with Windows 7. Total cost: $544. Can't complain about how computer costs have fallen over the years.

But I'm curious: Are David & I now the aberration or the norm? Do most families share one computer, or does everyone (adults, at least, and probably older teens) have their own?

Also, I remain slightly boggled by just how damn much computing power we get to take advantage of these days. David's standard computing lineup consists of: MacBook, iPhone, iPod 60GB classic, BlackBerry, fancy Canon camerathingie I forget the details of.

My computing setup: Windows desktop at home, HP Mini netbook for travel, BlackBerry, cell phone (very primitive Samsung, but it does have a browser), Palm (Tungsten E2, and I remain in deep denial about Palms basically being discontinued), iPod nano and Bluetooth-equipped Canon PowerShot. And all of that together costs less than my family's first IIGS. Wow.

My next career move: Professional gambler

Back in 1969(ish), my mom decided to invest in real estate.

Her much-older sister, who was of a generation that strongly believed in investing in Tangible Things, bought a summer house upstate. It was once part of a batch of cottages owned by a local hotel, which got sold off piecemeal as the 20th century progressed. Soon after her sister bought her house, the one ten feet away came up for sale. Family lore (I haven't cross-checked against property deeds or anything) has it that my mom bought the house for $6,000, and its furnishings for another $3,000. Thus did my family acquire a 700-square-foot house named Covehurst, more popularly known as "the decrepit shack in the Adirondacks."

(That sounds unfairly derogatory except to those who have actually seen the place. It was built around 100 years ago and, until recently, left untouched. Functional plumbing was an exciting and rare occurrence.)

Since we had a "summer house," my family trekked up to Brant Lake every summer. And promptly began casting about for entertainments. Our 30-year-old vintage Monopoly set, Lake George tourist traps, and outlet shopping will only take you so far on a family vacation. You eventually need new distractions.

Like gambling.

At some point, my family realized that Saratoga Springs was less than an hour away. My mom and dad had always enjoyed horse racing -- my dad has stories of the Triple Crown race he watched Secretariat run live, and win by 31 lengths. So we began making annual day trips to the Saratoga races. I'm pretty sure my sister and I started betting on horses before either of us had our first beer, which has to be a fairly novel and backward way of doing things these days.

This weekend, my family converged upstate, and I spent Friday watching the last seven races of the day at this year's Saratoga meet. I don't know enough about horses to handicap with any kind of "effective" gambling system, and I suspect that if I did, I wouldn't be successful any more often than I am now. If gambling were a science, lots more people would be rich. So I look over the stats, but I'm still susceptible to a catchy name.

Like "Economic Tsunami."

In the middle of an epic recession, is there any way I'm not betting on the horse named Economic Tsunami?

I picked another horse that looked good and laid down an exacta box and an across-the-board bet on Economic Tsunami.

Who came second! I can't recall exactly what I was holding, but I hit the exacta and a few other bets, and my $10 wager paid me back around $100.

That was the first of three exactas I hit, my new daily record. Since I only place $2 bets, I'll never win crazy money, but I walked in with a stake of $120 and left with $296.40 (advantage of a statistician spouse: you always end up knowing exactly what you won or lost), which was definitely my best day at the track to date.

And I owe it all to Economic Tsunami.