 Internal Revenue Service IRS tax news. Taxpayers should file their tax return on time to avoid costly interest and penalty fees. Interest and penalty fees otherwise known as the stick that the IRS wields. It may not look like much, but that thing can cause damage. But first, an attempt at a joke, I apologize in advance. The administration still wants to increase government spending in the midst of an inflationary period. That's like ironing a four leaf clover. You really shouldn't be pressing your luck. It's clear that a few of the four leaves on the clover have long since burned away from the excessive clover pressing process. Is a one and one third leaf clover still lucky? I can still see where the other leaves were. I think they've refused to pick up the iron out of embarrassment of what they did to the once lucky clover. Oh, what a tangled web we weave. Once we've burned up the lucky clover, we stumbled upon due to stupidity. IRS tax tip 2022-42 March 17, 2022. Taxpayers should file their tax return by the deadline even if they cannot pay their full tax bill. Taxpayers who owe tax and don't file on time may be charged a failure to file penalty. This penalty is usually 5% of the tax owed for each month or part of a month that the tax return is late up to 25%. If an individual taxpayer owes taxes but can't pay in full by April 18, 2022, that being the deadline, they should. And just note that if you can't pay in full, then generally you want to be setting up the payment plan as stated here. Because what you don't want to do, in other words, is to just say, well, I can't pay the taxes, therefore I'm going to ignore it. And if you do ignore it because the IRS is kind of a slow moving bureaucratic machine, you might say, ah, that's no big deal for a while. And then you might get letters for a while and then it'll start to build up as the IRS wheels that stick and get some momentum in on it. And then they build up the penalties and interest which can build up over time. So what you would like to do instead if in that situation is to say, okay, I know I'm going to owe money. And so what I'm going to do is basically still file and then possibly set up a payment plan. If I have to, you could do most of that stuff basically online. You don't really even have to talk to anybody to set up the payment plan. Generally it's something that you could do pretty much automatically or through the IRS website oftentimes. So that's what you want to do to once again avoid the stick of penalties and interest. So here's what we got. We're going to file the tax return or request an extension of time to file by April 18th deadline. Note that if you request an extension of time and you owe money by the deadline of April 18th, which might not be the case for many people because many people you would think if they were a W2 employee, you might have overpaid the taxes and are expecting a refund. If you're in the situation where you're getting a refund, the IRS is not as concerned that you don't file the taxes by April 18th because they owe you money and it's not as big a problem. However, if you owe them money, you haven't made the payment and you're going to owe them money, then there's two types of penalties and interest you got to be aware of. One is the filing requirement. And so you want to make sure that you file and make them aware that you owe them money. You might ask, how can I do that? Because the point is that I haven't done my taxes so I don't know how much I owe. In other words, maybe I have bookkeeping stuff I need to do for my Schedule C business or something like that and I haven't done it so I don't know how much I owe but I know I'm going to owe money because I made money and I haven't paid my taxes in estimated tax payments. Well, then you're going to have to estimate it in some way, shape or form to avoid the penalties and interest. One, you can file and avoid that penalty and two, so you can make an estimated payment at the point in time that you file to once again avoid the stick that the IRS wheels around which is called penalties and interest. So people who owe tax and do not file their return on time or request an extension may face a failure to file penalty or not filing on time. Now, if you file an extension, remember that that does relieve possible penalties for not filing on time but not payment penalties. So you still got to make the estimated payment to avoid. So that means you get hit by the one stick but they still got that other one that they'll hit you with that you got to be careful of. Taxpayers should remember that an extension of time to file is not an extension of time to pay. An extension gives taxpayers until October 17, 2022 to file their 2021 tax return but taxes owed are still due April 18, 2022. Again, you might say, how do I know how much taxes I owe because I didn't do my taxes because I didn't have the information. That's why I went on extension. Well, then you got to estimate it and then give them money if you want to avoid penalties and interest. That's just how it is. That's how they do it. So to get an extension to file, taxpayers must do one of the following. Form 4868, there's a link to that here through their tax professional tax software or using free file on IRS.gov. So it's typically fairly easy to get that form. You could just find it on the IRS website. If you're using software, you can use the software. If you have a tax professional, you can request them to do it for you most likely. Submit an electronic payment with direct pay electronic federal tax payment system or debit credit card or digital wallet and select form 4868 or extension as the payment type. So if you owe money, one way that you could just make the extension payment is to make the payment that you owe and then just simply select form 4868 as the reason for the extension, which will in essence file the form or put you on extension status. Obviously, you can only really do that if you owe them money and you make the payment, which will put you basically on extension, which is really when you need the extension most. Because again, if they owe you money, they're not quite as concerned about this whole thing because they're happy to pay you later your refund. But if you owe them money, they are concerned and action needs to happen. Action needs to happen because you owe us money. We want something happening here. So pay as much as possible by April 18th due date, whether filing a return or requesting an extension, taxpayers must pay their tax bill in full by the deadline to avoid interest and penalties. So you want to pay whatever you owe by the deadline or interest penalties accrue one way or the other. And the stick will be starting to circle over the head of the IRS. They're kind of get some circling around. So people who do not pay their taxes on time will face a failure to pay penalty. The IRS has options for taxpayers who can't avoid to pay taxes. They owe can't afford to pay taxes. So then you can look up your options if you can't pay the tax at that point, possibly setting up a payment plan or something like that. Set up a payment plan as soon as possible. Taxpayers who owe but cannot pay in full by April 18th don't have to wait for a tax bill to set up a payment plan. So if you go on an extension, you might say, well, I can't file the taxes because I don't have my bookkeeping ready yet. And I'm going to go on extension. But do I have to wait till I get the tax bill in order to in order to file a payment plan? No, you could set up a payment plan with the IRS and start paying them penalties and you know, start paying them in installments earlier, which typically will want to do so that you can avoid penalties and interest. So they can apply for a payment plan on irs.gov. There's a link to that here. Taxpayers can also submit a payment plan request using form 9465 installment agreement request. Interest is based on the amount of tax owed and for each day it's not paid in full. Interest rates are determined every three months and can vary based on type of tax. For example, individual or business tax liabilities. More information is available on the interest on under payments and over payments page of irs.gov. There's a link to that here. There's also more information and links down below for what is the due date of my federal tax return or am I eligible to request an extension tax topic 653 IRS notices and bills penalties and interest charges. There's links to that wonderful reading information and more all this wonderful stuff to avoid that sticks of those multiple sticks that the iris wheels at one time with like their million hands like a centipede of hands. Wielding various sticks that are threatening to hit you with and this is how you can look into this stuff to see how to avoid them. So there'll be a link to this in the description.