 Internal Revenue Service IRS tax news. Miss the April tax deadline? File and pay by June 14th to avoid a larger penalty and interest. Did you miss your lunch money confiscation deadline? Make sure to get it to me within the hour if you don't want to get hit by these giant sticks. But first, an attempt at a joke. During the last presidential press conference, a picture of milk was spilled all over the conference table. The press secretary taken the opportunity to remind the American people we shouldn't cry over spilled milk. Biden, however, took the opportunity to crawl under the table where he clutched his binder and continued to sob uncontrollably as the spilled milk bubbled overhead. It's okay to sob, cry, or even yell incoherently at clouds as long as you're under the spilled milk. Or the spilled economy, the spilled foreign policy, the spilled institutional credibility. Because, like, how could the spilling of all that stuff be your fault if you're, like, under the stuff that somehow got spilled? In fact, the administration has a massive campaign digging a whole halfway to China. A whole funded by China so as to get under all the stuff they spilled. Where, as with the milk, it is safe to sob, cry, yell incoherently at clouds and lie about all the stuff you spilled overhead. Which, of course, spills more credibility, requiring them to dig the hole deeper, the whole funded by China. I forgot, just stop spilling stuff and take a little responsibility, whatever. For 2022-123 June 9th, 2022 Washington, the Internal Revenue Service today advised taxpayers who missed the April tax deadline that they can usually avoid a larger penalty by filing their 2021 federal income tax return and paying any tax due by Tuesday, June 14th. So, obviously, you want to avoid the sticks of penalties and interest here. That's what we're trying to do. How do you do it? You pay the IRS on time. You file on time. Avoid the larger penalty. The IRS must receive the return by June 14th. This means that a return mailed on that date will not qualify. For that reason, the IRS urges everyone to file electronically by June 14th. But, obviously, trying to push the electronic filing because they're basically doing the paperless thing. And that should be a little bit easier on their end. And it should be easier on our end as well if we get used to the kind of electronic filing and the options available for the electronic filing, which may include at this point the free file options, which you can find on irs.gov if your income is below a certain threshold. In addition, taxpayers can also limit late payment penalties and interest charges by paying their tax electronically. The fastest and easiest way to do that is with the IRS direct pay. There's a link to that here. A free service available only on irs.gov, irs.gov. BV for victory over taxes, paying them at least. Several other electronic payment options are also available. You can visit irs.gov. For payments for more details, there's a link to that here. How the penalties work? How do you hit me with these sticks? I could take it. Let me see what we have here. Those who missed the June 14th cutoff will normally face a minimum late filing penalty, known as a fail-you-to-file penalty. By law, if the return is more than 60 days late, the minimum penalty is either $435... Ah, no. Okay. I'll do it. I'll do it. I'll file. ...or 100% of the unpaid tax, whichever is less. This means that the penalty will equal the tax due if the taxpayer owes $435 or less. If they owe more than $435, then the minimum penalty will be at least $435. Under the normal calculation, this penalty is 5% of the unpaid tax for each month or part of a month that the return is late up to a maximum of 25%. Visit irs.gov. For slash penalties for late details. So obviously, we're trying to avoid the penalties, so that's why we're going to try to file on time. The late filing penalty will stop accruing once the taxpayer files. So you want me to stop hitting you with this stick? Do you? Stop hitting you? File your return for crying out loud. That's learned your lesson. So in addition, the separate late payment penalty and interest will stop accruing as soon as the tax is paid. The taxpayers need not figure any of these charges. Instead, the IRS will bill them for any amount due. So it's not like you got to figure out what the late penalties are. The IRS will calculate it and then hit you with it. So other filing deadline rules, some taxpayers get more time to file even if they don't request an extension. These special deadlines affect penalty and interest calculations for those who qualify, such as members of the military serving in combat zones. So if you're serving in the combat zone, your life is on the line. You might be getting shot or something or worse. And then the IRS is gracious enough to extend the tax filing deadline as long as you're in that kind of area for some time, for a short time. So taxpayers living outside the U.S. possibly and those living in declared disaster areas. Combat zone taxpayers, military service members and eligible support personnel serving in the combat zone have at least 180 days after they leave the combat zone to file their tax returns and pay any tax due. A complete list of designed combat zone locations or designated combat zone locations can be found in Publication 3d Armed Forces Tax Guide. There's a link to that here available in IRS.gov. Combat zone extensions also give effective taxpayers more time for a variety of other tax-related actions, including contributing to an IRA. So that's one of the last kind of things, tax planning things that we might think about. So it's nice if you can have a bit more time to see whether it would be worthwhile to put some money into the good old IRA. Various circumstances affect the exact length of the extension available to taxpayers. Details including examples illustrating how these extensions are calculated are in the Extensions of Deadline sections in Publication 3. Taxpayers outside the United States, U.S. citizens and resident aliens who live and work outside the U.S., the United States and Puerto Rico have until June 15th, 2022 to file their 2021 tax returns and pay tax due. The special June 15th deadline also applies to members of the military on duty outside the U.S. and Puerto Rico who do not qualify for the longer combat zone extension. Effective taxpayers should attach a statement to their return explaining which of these situations apply. Though taxpayers abroad get more time to pay without penalty for late payment, interest is due on any unpaid tax from this year's April 18th deadline. The interest rate is currently 4% per year compounded daily. The interest rate rises to 5% on June 1st, 2022. That's that inflation thing kicking in. For more information about these special tax rules for U.S. taxpayers abroad, see Publication 54, tax guide for U.S. citizens and resident aliens abroad on IRS.gov, and there's a link to that here. Disaster Areas. So, IR, it's like my living room, it's a disaster area. So, the IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in a federally declared disaster area when at least one area qualifies for FEMA's FEMA's Individual Assistance Program. So, ordinarily, this means that the taxpayer need not contact the IRS to get disaster tax relief for details on all available relief. Visit the Around the Nation page on IRS.gov. There's a link to that here. Penalty Relief for some people. How can I stop? I just don't want to get hit by the stick for crying out. Give me a little relief, just a little relief so I can get things. Okay. That says the IRS taxpayers who have filed and paid on time and have not been assessed any penalties for the past three years often qualify to have the penalty abated. So, for good behavior, if you've got good behavior, then you might be able to abate the penalty. Kind of like a credit card type of thing when you're like, when you call in and say, well, we got a late payment penalty, but it's my first time, and so they might, you know, remove it. See the first time penalty abatement page. There's a link to that here. It's on the IRS.gov website. A taxpayer who does not qualify for this relief may still qualify for penalty relief if their failure to file or pay on time was due to reasonable calls and not willful neglect. So, that's a tough thing to kind of prove on the circumstances, but you can plead your case to those who may listen to it. So, anyone who receives a penalty notice from the IRS should read it carefully and follow its instructions for requesting relief. See penalty relief in IRS.gov for the types of penalty relief and how to make the request. Just a little relief. In addition to penalties, interest will be charged on any tax not paid by the regular April due date. And the interest on top of the penalties for individual taxpayers is the federal short-term interest rate plus 3 percentage points. This means that until June 30th, the rate is 4% per year compounded daily starting July 1st, 2022 through September 30th, 2022. The rate will be 5% per year compounded daily. Interest rates are subject to change quarterly. So, on a quarterly basis, they'll probably be going up given the current circumstances of the economy. Interest stops accruing as soon as the tax is paid in full by law. Interest cannot be abated. Ways to pay. So, how can you pay? I'll pay. I'll pay. How? Just tell me what I have to do. I'll do it. Many taxpayers mistakenly delay filing because they are unable to pay what they owe. Often, these taxpayers qualify for one of the payment options available from the IRS. These include. So, obviously, if you can't pay, maybe not so obviously, but many people more so than prior years might not have been able to pay their taxes in the last couple years because of all the weirdness going on. So, what you would want to do there is still file the tax return because you're trying to avoid the penalties and interest, which might not seem as intuitive at first because if you don't file, there's no immediate action that usually takes place from the IRS. What they do is basically just accrue up the penalties and interest and then they'll eventually hit you with it. So, you don't want to do that because you're going to cause yourself a problem, you know, bigger problem that you'll have to face at some point down the road. What you want to do instead is try to be in compliance as much as possible, file the return. If you can't pay the bill, then possibly sign up for an installment agreement, which you could basically do online. You don't have to talk to anyone to do it or, you know, beg or anything like that. You could just go online typically and set one up oftentimes for many people. Installment agreement and installment agreement or payment plan allows a taxpayer to pay overtime. Individuals who owe $50,000 or less in combined tax penalties and interest can request a payment plan using the IRS's online payment agreement application. There's a link to that here. Those who have a balance under $100,000 may also qualify for a short-term payment plan up to 180 days. The plan can be set up in minutes and requesters receive immediate notification of approval to receive, to reduce the chance of default and avoid having to write and mail a check each month. Taxpayers can select the direct debit option for making these payments. So, you can kind of make the automatic payments if you would like to, because obviously if you miss a payment, then they're going to say you default on the payment. And then you're going to have to set one up again possibly and it's a hassle. For other ways to set up a payment plan, visit payment plans, installment agreements. There's a link to that here. There's the offer and compromise. Some struggling taxpayers may qualify to settle their tax bill for less than the amount they owe by submitting an offer and compromise. That would basically mean that you owe a lot of money typically and you're not in a circumstance where you'll be able to pay it now or in the future, which you would think that the IRS would want then is say your balance sheet and income statement in essence to determine whether or not you really have a financial hardship and they're not likely to get paid the full tax bill. And so that's when they might, it would behoove both sides. It would be beneficial for both sides then possibly to lower the tax bill to something that would be payable. So that's a more unusual kind of step, but there's a lot of information on it if you want to look into that. And again, it's usually for people that are struggling financial difficulty, insolvent kind of situation. So to help determine eligibility, use the offer and compromise pre-qualifier tool. There's a link to that here. Check withholding. It's taxpayers who owe tax for 2021 can avoid having the same problem for 2022 by increasing the amount of tax withheld from their paycheck for help determining the right amount to withhold. Use the tax withholding estimator on IRS.gov. You can check out your estimations. I think everybody kind of needs to do that a little bit more often these days because once again the tax law is changing and your income is probably changing more rapidly or most people are jumping around from job to job and whatnot. Might have had some unemployment, might have most people working, might have picked up some gig work. That's all complicating the confusing process of the withholding process, the tax withholding estimators, there's an estimating tool, basically projection software that can kind of help you to figure out what your estimated payments should be in those more complex situations. So there's links to that. There's links to all this other kind of stuff here. There'll be a link to this in the description.