If you owe the IRS money, there’s no doubt you’re feeling stressed and overwhelmed.
There’s no need to panic if you have an IOU with the IRS as long as you know how to handle the debt in a way that works for them, and for you.
Check out this handy guide that will explore the best way to pay taxes so you can send payments like a boss.
1. Use DirectPay
One of the easiest ways to pay the IRS is to set up an electronic funds transfer right from your checking or savings account. This service is called DirectPay, and it’s readily available right on the IRS website.
When you sign up for this program, you can schedule your payments up to 30 days in advance. You also have the ability to cancel or change the amount or source of your payments up to a full two business days before their original schedule.
The system will not save your information, so you’ll need to re-enter your personal information every time you use it. This is for your protection, and the system works quickly and efficiently to get those payments to the IRS on time.
2. Pay Online with EFTPS
Once you register with the Electronic Federal Payment System, or EFTPS, you can schedule payments to the IRS up to a year in advance. This system is similar to DirectPay in that you can change or cancel your payments up to two business days before the transmission date.
This option is ideal for those who want to pay all of their estimated tax payments at once or if the payment is extremely large. It’s also ideal and commonly used by businesses.
There’s no processing fee with EFTPS and it can handle any type of tax payment including the standard 1040 balance due. It’s also good for extension payments, corporate taxes, and payroll taxes.
The system will save your information once you enroll which makes paying more streamlined. You should receive an email confirmation with a number for every transaction made, and the system keeps a record of your payment history for up to 16 months.
3. Best Way to Pay Taxes: Use your Debit or Credit Card
If you’d rather make a simple payment using a debit or credit card, you can do so, but you have to use one of the payment processors already approved by the IRS. These processors may change, but there are currently three available online.
There will be a transaction fee associated with this method, but it might be tax-deductible depending on the situation. Once the payment is made, you cannot cancel it, but it’s a good option for people who need to make their payments quickly.
Keep in mind that if you pay via credit card, you’ll pay your interest rate on the card as you pay it off.
4. A Good Old Fashioned Check or Money Order
If you prefer not to use an online method, you can always mail a check or money order directly to the IRS to make a payment. Make sure you include all pertinent information including your SSN, tax form, and the tax year for which the payment applies on the memo area.
When you send a check or money order, include Form 1040-V. This is the payment voucher. Be sure you do not staple your check to the form or paperclip them together.
Mail your payment to the address shown on the form. You can also find the correct address online at the IRS website.
5. Pay Your Fees in Person
For those concerned about fraud or lost payments, this is the best way to pay taxes. You’ll need to find out where your local IRS office is, and you should make an appointment in advance to avoid waiting in line.
If you don’t want to stand around your local IRS office, try an IRS retail partner. These are participating stores that will allow you to transmit the payment from their location.
You can find IRS partners online, but keep in mind that this method may take several days to process. You can also pay cash at both of these locations, just be sure to get a receipt showing the date, amount, and a confirmation number.
6. Direct Debit
If you e-file your return and use tax preparation software, you can set up a direct debit plan that takes funds right from your checking account. This can be done on your own, or you can enlist the help of a tax professional.
All you need to do is enter your bank account information into the program, and the payments will be made according to the parameters you set.
7. Bank Wire Transfer
Your bank should be able to set up a same-day wire transfer that is payable directly to the IRS. The fees for a wire transfer will vary by bank, but it’s a good option if you need to make a payment quickly.
Your fees could be higher if the size of the payment is significant. In some cases, you may not be able to wire money this way, so it’s always best to ask your bank beforehand so you can be prepared.
Payments Made Easy
There are several best ways to pay taxes depending on your needs, your situation, and the level of urgency. Explore all of your options so you can determine which method will work best for you.
Contact us today for a free consultation and for tax help, and visit our blog for lots of helpful tips on taxes and more.
