 Internal Revenue Service IRS tax news. Taxpayers who owe and missed the April 18th filing deadline should file now to limit penalties and interest not too late to claim the child tax credit for 2021, IR 2022-91, April 19th, 2022 Washington. The Internal Revenue Service encourages taxpayers who missed Monday's April 18th tax filing deadline to file as soon as possible. When was that deadline? Monday, April 18th. But that was yesterday. I know that was yesterday. You would have known that if you watched these presentations on a day-to-day basis, you should be checking this news on a day-to-day basis. I understand you're probably binge watching a whole year's worth of tax news right now, but you really should be picking it up on a day-to-day basis. Now, if you missed the April filing deadline or you know someone else that missed the deadline, which you don't typically want to do, especially if you owe money is to say, hey, look, I owe money, I can't pay the money, therefore, I'm just not going to do anything. I'm not going to file. I'm not going to take any action. And then when I get the money, then I'll file and I'll take action. The problem with that is that you're going to be accumulating upwards, more penalties and interest. And the IRS is pretty slow to act oftentimes because there's slow bureaucratic agency. So what will happen is you probably won't have any consequences for some time. And then the snowball will slowly roll down or I like to say the stick will slowly roll down the hill and pick up more like material on it. So it gets to be a big stick by the time that like they hit you with it with the penalties and interest. So what you would like to do or advise someone else to do if they missed the filing deadline, especially if they owe money is to file the tax return to be in compliance and then try to get on a payment plan, which can lower the amount of penalties and interest and also kind of like if you're dealing with like a credit card company or something like that, they might, you know, if you're on good terms with them and you've got a late penalty or something, they might waive the late penalty and that kind of thing, the same kind of incentives are there with the IRS. If you're in compliance with them, they're more likely to lower, stop hating you with the sticks of the penalties and interest and maybe even be able to waive penalties and interest if you're in compliance. That's how the whole kind of thing is set up. So while taxpayers do a refund, receive no penalty for late, for filing late, those who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest. So if you don't owe any money, the IRS isn't as concerned about it because of course in that case, if you file, they have to pay you and if you, if you don't file, then they're no, they don't have to pay you with it, right? They have to, you can wait until a later point in time and they'll pay you at a later point in time. So what's really the big emphasis is if you owe the money, which is probably more likely that people will not file if they owe money, because the fact that they owe the money and might not be able to pay it might be the reason that they're discouraged to file and just don't take action at that point in time, which is not the thing you typically want to do. You're going to want to face the tax bill and say, there it is. I'm filing the return. I owe all this money and I can't pay it, but at least I recognize it. And then I'll go on the payment plan or whatever from that point. So families who don't owe taxes to the IRS can still file their 2021 tax return and claim the child tax credit for the 2021 tax year at any point until April 15th, 2025 without any penalty. This year also marks the first time in history that many families with child in Puerto Rico will be able to claim the child tax credit, which has been expanded to provide up to $3,600 per child. Some taxpayers automatically qualify for extra time to file and pay taxes due without penalties and interest, including members of the military who served or are currently serving in combat zones. So if you're serving in a combat zone in our military, defending our freedom, thank you for your time. And the IRS is gracious enough to give you a short amount of extension to file. So they may qualify for an additional extension of at least eight 180 days to file and pay taxes. So there's a link to that here. Support personnel in combat zones or a contingency operation in support of the armed forces. So they may also qualify for a filing and payment extension of at least 180 days. 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, including military members on duty who don't qualify for the combat zone extension may qualify for a two-month filing and payment extension. Some disaster victims, those who qualify for more time to file and pay what they owe. So file without penalty to get a tax refund. Some people may choose not to file a tax return because they didn't earn enough money to be required to file. So this is the whole thing. If you ask the question, there's two different questions here. How you require to file is different than should I file, would it be beneficial to file? If you ask the question, am I required to file, then you would think the typical response from the IRS would be, well, if your income is below a certain threshold, and you would think that would be like around the standard deduction because if it's an income tax and you've got your income minus the standard deduction that everybody gets, then, and you don't have any income after that, right? You wouldn't owe any taxes. So if it was just a tax kind of thing, you would think that if your income was below the threshold that you wouldn't have to file, and that's typically the case. The IRS isn't going to come after you and say, you know, do, do, you know, hit, shoot, start hitting, you start bombarding you with those sticks, not literally, but the penalty and interest sticks, they start hitting you with them. They're not going to do that if, if you owe, if, if your income's below the threshold because you don't know any taxes, but you might still get a refund. And classically, you would get a refund because if you had a W-2 withholding, then they would have withheld money and you didn't know any taxes, so those withholdings should be refunded to you. That would be a refund. But now we've got all of these other refundable credits, like, and they've been increased in the refundable credits, which means you can get a quote, refund, end quote, which isn't really a refund. It's more of a benefit program that they kind of wove into the tax system. Those include things like the child tax credit has a, has, is basically a refundable credit. The earned income credit is basically a refundable credit. Now we've got the stimulus payments, which are tied to the recovery rebate credit. So those add up and can be quite significant at this point in time. So if you haven't filed and you're not required to file, you may still want to file and the IRS somehow has gotten these private software companies to offer software for free in the free file thing. So now you got free software to file, even though the tax returns are way complex compared to what they would be without all these refundable credits, but now you got software to help you out. So you might as well check it out if you haven't filed, even if you're not required to, to see if you, if you get a benefit from it. So, so, but they missed out on receiving a refund. They only, the only way to get a refund is to file a tax return. There's no penalty for filing after the April 18th deadline. If a refund is due, taxpayers are encouraged to use the electronic filing options, including IRS free file. There's a link to that here, which is available on IRS.gov through October 17th to prepare and file 2021 tax returns electronically. Now note that this free file option, however, they got these private companies to offer their software for free. They took their, they took their stick and then they took the elbow of the company and put it like behind their back until like it was going to break or something. And that's how they forced them I'm imagining to get this free software out there, but they could only do it. They could only hold that like wrestling move for a certain time and it's go out towards the extension like, like October 17th. So after that time, you don't have access to the free software. So if you haven't filed and you think you get a refund, check it out because you got the free software. If you don't do it past that time period, then you don't get like the free software after that. So while most tax credits can be used to reduce the tax owed, there are a few credits that allow taxpayers to receive money beyond what they owe. So the most common examples of these refundable credits are the earned income tax credit, the child and dependent care credit and the child tax credit. So these are huge credits at this point in time that have a huge refundable portion, meaning if your tax liability is zero, they can still qualify you for, you know, a significant amount of money. So those who don't usually file and don't qualify for a third round economic impact payment or get less than the full amount may be eligible to claim the 2021 recovery rebate credit. So there's the other one, when they filed the 2021 tax return, taxpayers often fail to file a tax return and claim a refund for these credits and others for which they may be eligible. Generally, the IRS issues a nine out of 10 refunds in less than 21 days for taxpayers who e-file and choose direct deposit. However, it's possible a tax return may require additional review or take longer. The IRS processes paper tax returns in the order they are received. Taxpayers can track their refunds using the where's my refund tool on irs.gov irs to go. It's an app irs to go or by calling the automated refund hotline at 800-829-1954, 800-829-1954. Taxpayers need the primary social security number on the tax return, the filing status and the expected refund amount. The refund status information updates once daily, usually overnight. So there's no need to check more frequently. So you don't want to be like checking that where's my refund thing like all the time because they only update it once a day if you are again, you probably have some kind of compulsive problem, some kind of thing, habit, bad habit that you're going to have to, you got to, you got to break that, you got to break that. Just check it like one time in the morning and one time at the night. It's most likely people that got that thing on their phone application because you know, they check it all the time. So you got to, you got to just stop that. So file to reduce penalties and interest. Spares should file their tax return and pay any taxes they owe as soon as possible to reduce penalties and interest. An extension to file is not an extension to pay, an extension to file provides an additional six months with a new filing deadline of October 17th. Penalties and interest applied to taxes owed after April 18th and interest is charged on tax and penalties until the balance is paid in full. Filing and paying as much as possible is key because late filing, penalties and late payment penalties add up quickly. So clearly the incentive structure from the IRS is to try to get the people to pay earlier because if they don't, then they start hitting you with those sticks of penalties and interest and so they keep on hitting you and then if you pay more, then the sticks get lighter. They put, they lighten the stick, the metaphoric sticks lighten up and so they hit you but it doesn't, doesn't like break any bones or cause any major bruises. If you pay, you know, a significant amount of the penalties and interest. So even if the taxpayers can't afford to immediately pay the full amount of taxes owed, they should still file a tax return to reduce possible delays filing penalties. The IRS offers a variety of options for taxpayers who owe the IRS but cannot afford to pay. Usually the failure to pay penalty is 5% of the tax owed for each month or part of a month that a tax return is late up to five months reduced for the failure to pay penalty amount for any month where both penalties apply. If a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less. The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached. The rate is subject to change. For more information, see the penalties page on the IRS.gov. You would think it might change with the whole inflation situation these days. Nothing, no rates are sticking still at this point possibly, we'll see though. Taxpayers may qualify for penalty relief if they have filed and paid timely for the past three years and meet other important requirements including paying or arranging to pay any tax due. For more information, see the first time penalty abatement page on IRS.gov. So it's kind of like with the credit card company, if you've got good history and then you call them up and say, hey look, I got this one problem this one time, but I've been doing good this whole time, then you might be able to abate the penalty, which means to like remove the penalty under certain conditions in some cases possibly so you can at least look into that in that case. So pay taxes due electronically on IRS.gov payments. Those who owe taxes can pay quickly and securely via online account. There's a link to that here IRS direct pay debit or credit card or digital wallet or they can apply online for a payment plan including an installment agreement. Taxpayers paying electronically receive immediate confirmation when they submit their payment with direct pay and the electronic federal tax payment system the EFTPS taxpayers can receive email notifications about their payments. Seeing a tax professional, the IRS offers tips to help taxpayers choose a tax professional to assist in tax preparation. So if you need a tax professional, you can take a look at the IRS's tips on the subject. You would think their tip would be pick someone that makes you owe a lot of taxes, but no, they're more based on the qualifications and whatnot. So the directory of the federal tax return prepares with credentials and select qualifications. There's a link to that here can help taxpayers find tax return preparers who hold a professional credential recognized by the IRS or who have completed IRS requirements for the annual filing season program taxpayer bill of rights. Taxpayers have fundamental rights under the law that protect them when they interact with the IRS. The taxpayer bill of rights. There's a link to that here presents these rights in 10 categories. The IRS publication one your rights as a taxpayer highlights these rights and the agency's obligation to protect them. There's a link to that here. There'll be a link to all this other wonderful stuff and there'll be a link to this in the description.