Higher interest rates are already a tax on consumers through higher mortgage rates, higher student loan rates and higher consumer loan rates. Is the economy strong enough to withstand a sudden ~30% increase in borrowing costs? Hopefully yes, since the actual rate we pay takes time to adjust higher, e.g. 5 years for a new 5/1 ARM to adjust.

Given the market determines rates, we can’t fully blame Donald for making borrowing more expensive for everybody. But what about Donald Trump’s plan to increase taxes on the middle class? Let’s learn what’s going on here and help find solutions for millions of Americans who are increasingly getting squeezed.

Some people have asked me whether they should file a tax extension (tax form 4868) if they can’t afford to pay their tax bill. Unfortunately, being unable to pay your taxes isn’t a reason the government accepts to file an extension. Neither is procrastination.

The only reason I can think of for filing an extension is if there’s a delay in receiving one of your tax documents that will materially alter your taxable income. The most common form that’s sometimes late is the K-1 form from a business partnership, S corp, or trust and estate beneficiary. You should always be able to receive your 1099s and W2s on time.

The K-1 form from my venture debt investment won’t be coming out until the summer. As a result, I’m forced to file an extension because there’s several thousand dollars in pass through income I’ll receive, which requires tax payments. I’m owed refunds of about $1,000 from both Federal and California, so waiting several more months to file isn’t a big deal. If I owed, then I’d still have to pay at least 90% of what I think I owe to avoid penalties. Extension filers have until October 15 to submit their returns.