With the tax deadline looming, here are some last minute things to consider when making your tax payments. Let’s assume for a moment that you owe taxes to the government this year and are pondering your payment options. What are the rules, guidelines, and solutions when it comes to tax payments?
- The fastest, as well as the most secure and accurate method, is an electronic payment. You receive a payment confirmation that can be referenced and tracked by the IRS staff. Many taxpayers choose to send a check. One of the drawbacks is the time it takes for the payment to clear – your confirmation can be a debit transaction in your checking account. The IRS reminds taxpayers to never send cash.
Here is how to pay taxes depending on your preferences:
- Pay taxes using a mobile device – the IRS facilitates this form of payment with IRS2Go app. You can download it for free for a tablet or a phone and pay with a debit or credit card or have the funds drawn directly from your checking account. The advantages are an immediate confirmation of your payment and the fact that you can make the payment at your convenience from anywhere and anytime.
- Electronic payment can also be made on line using IRS Direct Pay. Payments are made with your checking or savings account and there are no fees for this service. You can use it to make regular or estimated tax payments and even check the status of previously made payments. You will have to select a form to which the payment is applied to, reason for payment (installment agreement, tax return, estimated payment, proposed tax assessment, extension, amended return), and the tax period.
- If you prefer to send a check or money order, remember to:
- Make the check payable to the “U.S. Treasury” (not the IRS).
- Do not staple the check to any form.
- Include your name, address and telephone number.
- Write tax year for which you are making the payment.
- Your social security number – in case of filing jointly use the social security number that appears first on the form you’re filing.
- Enter the form number you are preparing.
- Include a payment voucher (Form 1040-V) with your payment and tax return and send the payment to the address listed on the form.
- Pay taxes over the phone – the IRS uses third parties to carry out these operations. Telephone payment using a credit or debit card will have fees, which are typically a percentage of the total payment amount when paying by credit or a flat fee when paying by a debit card. These fees are charged by the service providers and not by the IRS. For the list of the companies handling IRS tax payments by phone, click here.
Last but not least, even if you owe taxes but are unable to make a complete payment at the time, the IRS still encourages you to pay as much as you can. You can set up an installment payment and settle your tax liability over time allowing you to keep the interest and penalties to the minimum. A prerequisite to apply for the payment agreement is to file all the required tax returns.