I thought that I was filing taxes early when I did it this week, but apparently the cutoff for IOUs from California was the 1st. Dammit.
(I’m not depending on this money the way other people are. Our news channel seems to like interviewing people who were counting on their refunds to pay their bills. I’m a big fan of refunds, but if you can’t pay your bills, you need to scale back your withholdings! Fill out a new W4 and get the money in your pocket now. It’s a fun savings trick, but you shouldn’t be relying on that money.
Of course, I understand that some people might enjoy the windfall so they set up their withholdings way back last January, only to lose their jobs and have no money available for bills. Which is why I hug my emergency fund every day.)
So my question is, what the hell do I do with an IOU?
Short answer is nothing. I’ve heard stories that sometimes banks will cash IOUs as if they were real checks, but nothing yet about how they’re planning on handling it this year. My understanding is this issue stems from an inability to agree on the state budget, not that California will shortly be begging for change at freeway exit ramps. We’re bound to get the money sometime.
The good news is that Californians will get interest on the IOUs. Maybe up to 5%. (Shit, that’s better than my ING accounts! Can I give them some extra money to hold there too?)
And if you owe the state of California, of course you have to pay it. The blogosphere is full of people wailing about how they are going to give IOUs in lieu of paying what they owe. Um, it doesn’t work that way. The payment of refunds has nothing to do with the fact that we all have to pay taxes. Except I paid mine and now you don’t want to pay yours. Yes, that seems fair – oh wait, no, I meant the opposite of fair. In fact, you should pay what you owe sooner rather than later so we’re all equal and have less money for equal amounts of time!