There’s still time to keep more of your money yours, and have Uncle Sam and the IRS say “what’s yours is mine” to less of your hard-earned income.

As you probably know by now, Tax Day, which is usually April 15th every year, this year is three days later, on Monday April 18th. So the annual day of tax reckoning for most of us is this coming Monday.

This fast approaching deadline made me think of something that all too many taxpayers do. And by doing it, they unnecessarily harm themselves and cause themselves to have a bigger tax bill than they’d otherwise have.

And I’m going to share with you an easy, inexpensive, and legal way to keep a whole lot of money in your own pocket and out of Uncle Sam’s pocket.

For one ordinary taxpayer I know – I’ll call him Tom the Taxpayer* – this easy, inexpensive, and legal method would have saved him more than $5000 a year for the last five years. It can have a similarly dramatic effect for a lot of taxpayers. Perhaps even you.

What is this easy, inexpensive, and legal trick? It is this: file your tax return on time. That’s it? Yes. That’s pretty much it, though there is a little more. Paying any tax you owe on time with the filing of your return helps a lot too.

Plus, there’s something you can do if you cannot get your return prepared and filed by Tax Day. More on that in a minute.

First though, most people don’t fully appreciate all the extra charges that get piled on when you file your return late.

When I looked through the records of for our friend, Tom the Taxpayer, his IRS account activity showed that he had gotten into a bad habit of filing his tax return late every year. And so, every year, his IRS account had charges added on for this stuff:

  • “Penalty for not pre-paying tax”
  • “Penalty for filing tax return after the due date”
  • “Penalty for late payment of tax”
  • “Interest charged for late payment”

As part of Tom’s late-filing routine, he also paid his taxes late, and so, he got hit with a triple whammy of the three different penalties shown above – penalty for not prepaying, penalty for filing late, penalty for paying late, PLUS interest (maybe we should call it a “quadruple whammy”?). All unnecessary. All avoidable.

And as I describe this, I wonder: does the penalty for “not prepaying tax” and the one for paying tax late sound like double-dipping to you? I know there is a real distinction between them, and these are, in fact the rules, but still. All the more reason to avoid getting charged with them.

(And by the way, don’t believe the television ads or aggressive tax resolution company salesmen, who talk about getting rid of “penalties-and-interest,” as if it were all one thing, to the point where it sounds like one word. They are not. Penalties and interest are different from each other. They are treated differently, and different rules apply to each. While Tom might ultimately be able to persuade the IRS to undo the penalties through a penalty abatement request, interest charges almost never go away. Anyway, I digress, I’m writing about taking control of your tax life so that you avoid these penalties and interest in the first place, so you are not hoping that the good graces of the IRS will agree with your request to abate the penalties they’ve imposed.)

This triple (or quadruple) whammy of penalties plus interest really added up for our friend Tom. Over five years, these Four Horsemen of Late Filing added up to over $26,000 in penalties and interest. That’s more than $5,200 a year, more than $433 a month, more than $100 a week.

How would you like to have a “free” extra hundred bucks a week?

Our friend Tom could have legally avoided this big tax bite and kept it for himself and his family.

And so, I suggest to you, with Tax Day upon us, that you learn from Tom’s mistakes and avoid them. And by doing so, enrich yourself by owing less money to the IRS. (If you are in a state that charges income tax, you’ll need to deal with that as well.)

This year filing on time means April 18th, which is Monday.

Can’t get it together over the weekend to put your completed tax return in the mail or e-file it by this Monday? No sweat. The alternative is to get an extension by filing a request for an automatic extension, IRS form 4868.

By filing a request for an automatic extension you get six more months to file your tax return, that is, you have until October.

If you then get your tax return prepared and filed within those extended six months then you will have filed on time.

You are supposed to pay the tax that you still owe by the original deadline, Tax Day (again, this year it’s April 18th) at the same time that you file your request for an extension but if you can’t you are better off at least getting the extension and then filing within the extension period. (As the IRS itself explains in the instructions for seeking an extension “Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. If you do not pay the amount due by the regular due date, you will owe interest. You may also be charged penalties.”)

So, to summarize, the easy, inexpensive, and legal method to keep to keep your tax bill smaller rather than larger, and to keep Uncle Sam from saying “what’s yours is mine” about even more of your hard earned money is to file your tax return on time. Plus paying your tax on time. And if you cannot file your tax return on time, at least file an application for an automatic extension (form 4868) on time.

*Note: Tom the Taxpayer is a composite of the experiences of a number of taxpayers. The experience described, and the numbers, are real.