The IRS Warns You Will Be Fined If You Forget to Do This
Taking this extra step is necessary to make sure you don't owe even more.
With Tax Day 2022 quickly approaching in April, the Internal Revenue Service (IRS) has been sending out helpful information to taxpayers, as well as alerts warning about scams that may attempt to target you through fake IRS communication. While many people will receive refunds (time for that well-deserved vacation!), some may end up owing money in the event that not enough was withheld from their paychecks, or if they are self-employed. Doing taxes can be daunting in general, but now the IRS is sending out an additional important warning to avoid a hefty fine. Read on to find out what you need to remember when filing this year.
To avoid a fine, be sure to file your return or request an extension by Tax Day, April 18.
This year, the final day to file your tax return or request an extension is April 18, rather than April 15, as a result of the Emancipation Day holiday in Washington D.C. Taxpayers in Maine and Massachusetts also have an extra day due to the Patriots' Day holiday, but are required to file by April 19. If you were affected by a natural disaster, you have even more time to file, according to the agency.
The IRS stresses that filing by the deadline is the most important aspect to avoid penalties and interest. However, if you find yourself in need of an extension, you'll want to be sure you are requesting that by your respective tax deadline. Taxpayers are eligible for a six-month extension that allows them to file by Oct. 17, 2022, and avoid penalties and interest that come with failing to file on time. Penalties for failing to file are based on how late your return is filed, as well as the amount of unpaid tax from the original payment due date.
An extension gives you extra time to file, but not extra time to pay.
If you are going to owe money rather than receive a tax refund after filing, your payment is still due as of April 18, even if you received the automatic tax-filing extension for October. In fact, if you owe taxes and don't pay, whether you apply for an extension or not, you will incur a late-filing penalty of 5 percent of your unpaid taxes each month, the agency said in its warning.
The agency advised taxpayers to estimate and pay any taxes owes by the due date, even if waiting to file before October. According to the IRS, filing your return by April 18 and just paying what you can will save you money in the long run, even if you can't pay the full amount you owe at that time.
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There are options if you can't bay your tax bill in full by Apr. 18.
If you are looking to pay over time, you can start with a partial payment—made by April 18—through Direct Pay, which the IRS cites as the "fastest and easiest" method. Other payment routes include an Electronic Funds Withdrawal, which takes money directly from your bank account, use of the Electronic Federal Tax Payment System, or paying online with a credit card, debit card, or virtual wallet.
Taxpayers may also want to consider getting a loan if unable to pay the full amount, as loan costs may be lower than the combined interest and penalties the IRS is required by federal law to incur. If you need to set up a payment plan, either short-term or long-term, you can take a few minutes to apply for a plan with the IRS online. If you are approved, you will be notified immediately, but if you don't qualify, you can still seek other options to pay in installments.
Online resources allow you to sign in to pay and view your payment history.
Using your online account through the IRS, you can securely see your information when preparing your return or keeping up with payments and balances. This is also the place where you can make a same-day payment for your 2021 tax return balance, file for an extension, or use a tool to estimate the amount you owe.