Filing past due date: What date counts for payment from interest penalty perspective

[iversonhw]

Hello,

I previously filed for extension and am planning to file my taxes this Friday. I owe taxes and will need to pay interest on the amount I owe. To minimize that, here are my options:

1. File by mail and I will include a check on the tax payment. It will take the longest for IRS to process my return, but what date will count from interest penalty perspective, will interest penalty be calculated from the date stamped on the mail, or will be based on the date IRS actually cashes the check.

2. E-file with electronic withdrawal. Same question here, will the interest penalty be calculated based on filing date or the date that the withdrawal is actually processed, which will be 7-10 days after tax is accepted.

3. Pay directly online via the IRS website, then modify tax return to reflect this payment and effectively the dollar owed on the return will be 0.

4. E-file without paying, but after E-file, pay immediately on IRS website.

Which one is the best option? I’d like to pay minimum interest penalty while keep money in my bank account for the longest.

[Anonymous · Accepted solution]

The IRS will charge interest on late or unpaid taxes, regardless of cause. The period covered always begins with the original due date of the return 7/15 , and ends with the receipt of payment by the IRS. You may incur interest expenses for late filing, or simply for making a mathematical error on your tax return.

so use 3. and make the payment immediately so it's paid on 7/30.  other methods will result in IRS receipt at a later date.  you do not reflect this on the return. there will be a balance due to which the IRS will add the interest 5% penalty for late payment - amount unpaid on 7/15 and then subtract the payment. you will get a bill for the rest 

[iversonhw]

Thanks for the answer! By "you do not reflect this on the return" do you mean with option 3, even if I pay on today on July 30ith, I should not include this payment in Schedule 3? For i.e. if I own 10 dollars, and I paid 4 dollars before July 15th, and I pay another 6 dollars today on July 30ith, the tax return I file tomorrow should only include the 4 dollars I paid before July 15th in Schedule 3 and still show a balance of 6 dollars?

[Critter-3]

You will NOT put anything more on the sch 3 if you are going to file today ... just go online and pay the IRS directly and they will balance your payment to the return with the balance due.  Sch 3 will only show what you paid with the extension ... do not enter what you are paying now for the balance due on the return. 

[phildonnia]

I always pay everything at the website.  I get a confirmation number, and  an emailed receipt, and I never have to wonder whether the IRS received it, or on what day.

Other than that, I e-file what I can, and mail in when that's required.  But the payment is made, even if everything else accidentally falls off a mail truck or gets lost in a box at the IRS.

[Opus 17]

---

@phildonnia wrote:

I always pay everything at the website.  I get a confirmation number, and  an emailed receipt, and I never have to wonder whether the IRS received it, or on what day.

Other than that, I e-file what I can, and mail in when that's required.  But the payment is made, even if everything else accidentally falls off a mail truck or gets lost in a box at the IRS.

---

If you have a completed tax return that shows what you owe:

1. Pay the tax now online, get your receipt.  Make sure you select 2019 as the reason.

2. E-file the return if you can, select "I will pay by mail" in Turbotax so it won't ask for more payment.

3. If you can't e-file, print your return and file by mail.  Go to the post office and use priority mail with tracking and delivery confirmation.  Keep those receipts.

If e-filing, there is almost never any paperwork to mail afterward.  There are only 12 specific types of paperwork that you can mail to the IRS after e-filing, they are listed on form 8453, which is a cover sheet for paper documents that must be mailed after e-filing.  If you have one of these situations, Turbotax will remind you to print the form.   If you need to mail any other documents or statements that are not listed on form 8453, you must print and mail your entire return.

• The late filing penalty is 5% of the amount you owe, per month or partial month.  So the penalty is the same whether you file on 7/16 or 8/14.  
• The late payment penalty is 0.5% per month of the amount you owe, except it is not charged for any month where you also have a 5% late filing penalty.
• Interest is a variable rate, about 1/3% per month right now.

If this is the first time you have owed a penalty, you can request a one-time abatement (forgiveness) once the IRS has sent you the bill.  (But by law, the interest can't be waived, only the penalty.)

https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penal...

[fanfare]

If your tax return says you owe $200, go to www.irs.gov/payments and pay $200 to minimize penalties.

Select reason 1040 year 2019.

Then file your tax return showing you owe $200.

Since you paid before filing, IRS will be almost satisfied but not quite.

IRS will bill you for being late.

[Carl]

The program will *ESTIMATE* any interest and penalties due, and that estimate is based on the date you complete the tax return - not the date you e-file it. Once the IRS receives your payment, if any additional interest is due they will bill you separately for that via the U.S. Mail.