Tax season is here and not only is it time to start collecting your tax documents but you will also want to consider your payment options. As you may know, taxes left unpaid by the original filing due date are subject to interest and a monthly penalty fee for late payments. Failure to file a return on time is also subject to late filing penalties.
If you cannot afford to pay your taxes by the filing due date, you should still file a return on time to avoid extra penalties. If you can’t pay in full, you should pay as much as possible to reduce the accrual of interest on your account. With this in mind, there are a few different options for paying your taxes. Understanding their functions will help you choose the one that best suits your needs.
Paying Electronically – EPTPS System
This system is primarily used by businesses. By paying electronically using the EFTPS system (Electronic Federal Tax Payment System https://www.eftps.gov/eftps/login/loginInitial) you can schedule your payment in advance and receive confirmation after you submit your payment. You can also opt-in to receive email notifications about your payments. Electronic payments through the IRS portal are safe and secure with the latest encryption technology. This is a quick option for those who wish to make their payments online. This is the only option for business tax payments.
IRS Direct Pay
IRS Direct Pay allows individual taxpayers to pay taxes directly from their checking or savings bank account with no extra charge. Direct pay also offers an option to schedule a payment in advance as well as modify or cancel a payment up to two business days before the scheduled payment date. Taxpayers will receive instant confirmation after making or scheduling payment and can use a look-up tool to view the payment status and payment details.
To set up Direct Pay visit https://www.irs.gov/payments where you can view your account information, view previous payments, and make and schedule payments using your bank account or a debit or credit card.
Pay by Mail
To pay by mail, enclose a check or money order with a copy of your tax return or notice. The payment must be payable to the United States Treasury. Include on the front of your payment; your name, address, daytime phone number, taxpayer identification number, tax year, and form or notice number.
With the current backlog at the IRS making payment online will ensure the payment is accepted and promptly processed. The paper mail backlog at the IRS office has not improved over the last year and does not look to improve in the near future. Online payments are secure, and you receive an instant acknowledgment that the payment has been received.
If you have questions or need assistance with determining which payment process suits you best, contact our professionals at The Innovative CPA Group at 203-489-0612. Or contact us online via our contact form.