4 Payment Options You Can Use If You Owe Taxes

You should be able to determine if you owe any taxes as soon as your tax return is complete. In some cases, such as filing an extension, you need to be able to estimate how much taxes you owe. You can also have the IRS calculate the tax for you and the IRS will send you a bill. You should pay the bill within 30 days (or by the due date of your return).

If you owe taxes and are able to pay the full amount, there are various ways that you can send the payments such as mailing a check, using a credit card, or using an electronic fund payments. If you think you cannot pay the tax in full, you can request for an installment agreement.

1. Mail-in Payments

You can pay the taxes owed by writing a check or money order made payable to “United States Treasury.” Although you may have already know this, I will remind you anyways that you should not send cash in the mail as a form of payment! The following information must be included in the front of the check so that IRS will be able to identify who it belongs to in case it get mixed up with the other documents:

  • Correct name
  • Address
  • Social security number
  • Daytime Phone Number
  • Tax Year and Form number

2. Credit Cards or Debit Cards

For you to use your credit or debit cards as mode of payment, you must use the authorized IRS service provider by either visiting their website or calling their toll-free number. You will be charged a convenience fee for using these services and may vary depending on which service provider you used. However, these convenience fees are deductible and can be claimed on your itemized schedule A and they are entered in the Miscellaneous Expense subject to the 2% of AGI limitations section.

Link2Gov

  • Convenience fee – 2.35% of the tax payment amount or $3.89 for qualifying debit cards
  • Phone payment – call 1-800-pay-1040
  • Online Payment – visit Pay 1040

RBS WorldPay, Inc

  • Convenience Fee – 1.95% of the tax payment amount or $3.89 for qualified debit cards
  • Phone Payment – call 1-888-9-Pay-TAX
  • Online Payment – visit PayUSATAX

Official Payments Corporation

  • Convenience Fee – minimum fee of $3.95
  • Phone Payment – call 1-888-UPAY-TAX
  • Online Payment – visit Official Payments

3. Electronic Fund Transfers

There are two kinds of electronic fund transfers that you can avail of: the electronic fund withdrawals and the EFTPS.

Electronic Fund Withdrawals

Electronic Fund Withdrawals is a way to authorize the IRS to withdraw funds directly from your savings or checking account. You must provide the type of account (savings or checking), the account number, and  the routing number of the bank. You have an option of scheduling the payment for any future date but no later than the filing due date.

Electronic Federal Tax Payment System (EFTPS)

EFTPS is a tax payment service provided by the US Treasury department and it is available either by phone or online. You must be enrolled in the system and received a PIN before you can pay by phone or online.

  • Fee Charged: Free service / no fees
  • Customer Service: 1-800-555-4477
  • Website:  EFTPS.com

4. Installment Agreement

If you are unable to pay the full tax amount owed, you can request to make a monthly installment agreement. However, you will be charged the interest and late payment penalties on the taxes that you have not paid on the filing due date, even if the request is granted.

  • How to Request For Installment: You need to complete the Form 9465, Installment Agreement Request.
  • How to Make Payments: You can pay by check or money order, credit card or debit card, or use the EFTPS.
  • Guaranteed Availability: The IRS must agree to accept the full payment of your tax liability in installments, if as of the date you enter into the agreement
    • Your total taxes do not exceed $10,000
    • In the last 5 years, you have not failed to file any required tax return, failed to pay any tax shown, or entered into an installment agreement for the payment of any income tax.
    • You are able to demonstrate that you are unable to pay your income tax in full when due
    • Your tax will be paid in full within 3 years or less
    • You agree to abide with the tax laws while your agreement is in effect.

Comments

  1. Beth says:

    Great list! Here are some details about the Electronic Funds Tax Payment System – http://www.bethbcpa.com/irs-offers-electronic-funds-tax-payment-system/

  2. This is a good article on what to do if you aren’t able to meet your tax payments on time. One thing that I think is missing is getting everything in writing. All agreements should be in writing then you are covered in case something goes horribly wrong.