Let's assume that you drew the short straw on the 2019 tax cuts, and you owe Uncle Sam this year. How do you plan to pay? There are plenty of ways other than the old-fashioned check submitted with a paper tax return.
If you file electronically, why not pay electronically? Electronic Funds Withdrawal (EFW) is available whenever you e-file your taxes.
When you e-file your taxes through commercial software, a paid tax preparer, or the IRS Free File program, simply submit an EFW payment request. You'll provide bank account information so funds may be withdrawn from your account directly. If you e-file early, you can schedule the funds to be paid at a later date (but before the due date for your return).
IRS Direct Pay is the agency's variation of direct payments from your bank account (different from EFW in that EFW requires e-filing). As with EFW, you'll supply bank information for the withdrawal, and you have options to schedule the payment. Direct Pay uses information from prior tax returns as your identifier, so you should have recent returns at hand.
The Electronic Federal Tax Payment System (EFTPS) allows you to pay taxes by phone or on the IRS website. EFTPS differs from Direct Pay in that you must set up an EFTPS account with the IRS. You'll receive an EFTPS PIN and a password as your identification.
Would you rather use credit or debit cards? The IRS doesn't charge for the privilege, but you can only use select approved service providers – and they do charge. Fees range from $2.00 to $3.95 for debit cards, and 1.87% to 1.99% for credit cards. Debit and credit card fees may be higher for e-file/e-payment options.
You can also submit credit and debit card payments via phone, or by a mobile device using the IRS2Go app.
Don't trust any of these new-fangled methods? Cash is still an option – but technology is also involved.
Use the Official Payments website of the IRS and select the PayNearMe option. You'll receive a link by e-mail to direct you to your payment code and payment location. Make the cash payment at the listed location, giving your payment code and cash to the clerk. Save the receipt, since that's your payment confirmation. Each cash payment costs $3.99.
However, PayNearMe is currently discouraged. The IRS and Treasury Department have extended the 2020 tax filing and payment deadline from April 15 to July 15, due to the COVID-19 pandemic. In the interest of safety and to curb the spread of the coronavirus, all Taxpayer Assistance Centers have been closed temporarily and face-to-face IRS services have been suspended until further notice. See the IRS Coronavirus Tax Relief page for the latest updates.
Want to stay old-school? You can still pay with a check or money order by including it along with Form 1040-V, Payment Voucher, in the envelope with your federal tax return. Make the check or money order payable to the United States Treasury, and include your name, address, tax ID number, telephone number, and the tax year. Aside from your taxes, your only cost is postage.
If you can't afford to pay all at once and don't want to use credit, you may be able to arrange monthly installment payments with the IRS. Assuming the IRS approves your plan, you can choose longer-term options or a short-term payment plan that you can pay within 120 days.
Short-term plans accommodate most payment methods, only adding accrued penalties and interest. Long-term plans also include setup fees, which may be lowered using online applications and automatic payments from your checking account. See the IRS installment payment plans page for details.
Choose the most effective tax payment method for you – just make sure that you choose one and follow through. You may forget that you owe taxes, but Uncle Sam won't.
Failing to pay your taxes or a penalty you owe could negatively impact your credit score. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
Originally Posted at: https://www.moneytips.com/how-to-pay-your-taxes
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