In the past, the only way to pay your tax was by a paper check. Over the years, other electronic methods became available, but most of them required you to pay a fee. Now the IRS and many states have ways that you can pay your tax or estimates without any fees. We are recommending to our clients that they pay their tax electronically due to processing delays at the IRS. Although we will talk mostly about IRS payments, you can also pay your state taxes electronically.
WHAT IS THE ADVANTAGE OF PAYING THE TAX ELECTRONALLY?
- Many that I can think of –
- Convenience of not needing to write a check, put in an envelope, put a stamp on it and mail it.
- You can set the date and amount, so you are not getting penalty notices for late payments even though you mailed it on time.
- Paying electronically gives you a confirmation number in case questions come up later.
- Can set up multiple payments all at one time that will come out on different days. Great for those who make estimated tax payments.
DID I HEAR THAT THE IRS IS STILL BEHIND ON PRCESSING RETURNS AND OTHER MAILED IN ITEMS FROM 2021?
- Yes. During the COVID-19 shutdown, only essential workers were at the IRS offices. Some areas of the IRS are still under these requirements. This and the staffing issues that they are having is making it hard for them to catch-up. I think the last time I heard, they are still millions and millions of returns and other mail behind as they enter this season.
WHAT PAYMENT OPTIONS ARE AVAILABLE?
- EFTPS – this is a system where you would pre-register and then once set up – you can make as many payments as you want including future payments. Those payments can even be changed later. This option allows you to see a history of any payments made within EFTPS.
- This is the same system that businesses use – although it can also be used by individuals.
- This is a little more complicated as there is a pre-sign up process, but once signed up, you can make a payment very easily.
IS THERE AN EASIER WAY?
- Pay Now by Bank Account – You can make a current or future payment which can later be cancelled if needed.
- This option can be found directly on the IRS website – irs.gov.
- It is not as convenient since each time you make a payment there is a verification process that you must go through.
- But the nice thing is that this option is free if paid through a bank account.
IS THERE STILL A WAY THAT YOU CAN PAY WITH A CREDIT OR DEBIT CARD?
- There is. This can also be done right from the IRS website.
- If you use your debit or credit card there is a fee which will be noted on the site.
WHAT ABOUT THOSE PEOPLE WHO ARE WORRIED ABOUT GIVING THE IRS THEIR BANK ACCOUNT INFORMATION?
- As the Economic Impact Payments showed, the IRS probably already has that information.
- Also they would have it if you had a refund direct deposited.
Be sure to talk to a tax professional if you have any questions about paying taxes electronically.
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.
