7 Ways to Pay Your Taxes: How to Pay the IRS
There are numerous ways to pay the IRS, some of which might surprise you. In the past, you could only pay the IRS by writing a check. So, there are a ton of possibilities right now.
Here is a summary of some typical IRS payment methods, their associated costs, and their benefits and drawbacks. Keep on reading to find out more from Your Part Time Accountant experts.
Withdrawal of Payments Electronically (EFW)
How it works: If you file your federal taxes using IRS Free File or another tax preparation application, this e-pay capability is made available right through the program.
You must enter your financial details to authorize a direct debit withdrawal from your bank to make a payment. So, you can also request that a live tax preparer use EFW to send your payment.
- Can be completed online using tax preparation software or by using a tax professional.
- Likewise useful for estimating payments.
- You can schedule both individual and specific company payments up until the deadline for your return.
- Each payment you make can come from a different bank account.
- You might have to wait for the Treasury Department to restore monies if the wrong amount was removed.
- Before contacting the IRS to cancel a payment, you must wait 7 to 10 days after your return is accepted.
- You cannot change the payment amount or account details after the IRS has received your return.
IRS Direct Pay
How it works: To authorize an ACH debit from your bank account, you must first authenticate your identity and bank details on the IRS Direct Pay website.
- Possibility of online completion.
- Additionally useful for paying estimated taxes, installment agreements, amended return payments, and tax extension payments.
- Can plan payments up to 365 days ahead of time.
- Up until two days before the payment date, you can modify or cancel an IRS payment schedule.
- Can pay on the same day.
- You are only permitted to make two payments in a day.
- Payment can leave your account in as little as two business days.
- Paying from a foreign bank account is prohibited unless it has a U.S. affiliate.
The Federal Tax Payment Electronic System (EFTPS)
How it works: You visit the IRS EFTPS website, provide your name and bank details, and then wait around a week for a PIN to arrive in the mail. So, create a password, return to the website, and approve an ACH transaction from your bank account.
- Available round-the-clock by phone or online.
- Works to pay all federal taxes, including those owed by businesses.
- Able to plan payments up to a year ahead.
- Setup may take longer than Direct Pay.
- If you ask your bank to start the payment for you, there may be a fee (rather than scheduling the payment yourself on the EFTPS website or via phone).
You Can Use Your Debit Card
How it works: You visit the website of one of the three separate payment processors used by the IRS, where you then enter your card details. As well as other information along with the payment amount. So, the money is sent to the IRS by the processor.
- Can be completed over the phone or online.
- Works with digital wallets for Visa, Mastercard, and American Express. As well as PayPal, Visa, Mastercard, Discover, American Express, STAR, Pulse, and NYCE cards (depending on which provider you choose).
- Transaction costs.
- Over $100,000 payments might need extra planning with the processor.
Credit Card Is Your Friend
How it works: You visit one of the three websites operated independently by the IRS and enter the payment amount. As well as your card details, and other information. So, the money is sent to the IRS by the processor.
- Can be completed over the phone or online.
- Therefore, works with digital wallets.
- Fees frequently negate the value of any miles or other incentives you might have accumulated by using your credit card.
- If you have a balance on your credit card, a hefty interest rate could be charged.
- Your credit score may be impacted if you charge a big sum.
- Payments can rarely be canceled.
- Your data is passed through a third party.
Cashier’s Check, Check, or Money Order
How it works: Mail one to the IRS with a check made out to the U.S. Treasury. Include your name, address, daytime phone number, Social Security or employer identification number, and the tax year. And the number associated with the relevant tax form or notice.
- A bank account might not need a cashier’s check.
- Cashier’s checks and money orders cannot bounce.
- You can track money orders and cashier’s checks to ensure receipt.
- Obtaining a money order or cashier’s check requires going to the bank or another supplier.
- There is a $1,000 cap on money orders.
- Payment delivery and posting could take many days or weeks.
- If there isn’t enough money in the account or you don’t have enough overdraft protection, regular checks may bounce.
How it works: To make a cash IRS payment, go to the IRS’s Pay with Cash at a Retail Partner website and follow the instructions.
Your information is verified by the IRS, and you receive an email confirming it. You will receive a second email with a payment code link and instructions. After that, you visit the shop mentioned in the email, have the employee scan your code, and then you pay. Therefore, you’ll receive a confirmation of payment and a receipt.
- Doesn’t call for a bank account.
- Possibly more affordable and practical than receiving a money order or cashier’s check.
- Accessible in all fifty states.
- Payment processing may take two business days.
- Can only pay $1,000 per day. Some merchants also have a $500 payment cap. However, payments can go through twice per day.
- Therefore, a trip to the bank might be necessary to obtain the cash.
- Perhaps include carrying a significant sum of cash.