Paying taxes is an inevitable part of life. As Benjamin Franklin famously said “In this world nothing can be said to be certain except death and taxes.” While we can’t avoid paying taxes, we can choose how we pay them in a way that is convenient, affordable, and practical. With the April tax deadline approaching, many taxpayers are starting to think about the best ways to pay their tax bill. Here are 10 smart options to consider
1. Pay Online Directly From Your Bank
The IRS offers an online payment system called Direct Pay that allows you to securely pay your tax bill directly from your checking or savings account at no cost. You don’t need to register, sign up or get approved. Just go to the IRS.gov Direct Pay page, enter your tax information, banking details and payment amount, and submit your payment The money will be automatically debited from your bank account, usually within 1-2 business days This is one of the fastest and most convenient ways to pay the IRS online.
2. Pay Online Using Your Credit or Debit Card
Another way to pay the IRS online is using your credit card or debit card. The IRS has payment processors that handle these transactions for a small fee. The fee varies by provider but is typically around 1.87-1.99% of the tax payment amount. So on a $1,000 tax bill you’d pay a fee of around $19. Though there is a cost it may be worth it for the convenience and rewards you can earn on your credit card. Debit cards have lower fees of around $2.50 per transaction.
3. Pay via Electronic Funds Withdrawal When e-Filing
Many tax preparation software programs and e-filing services, like TurboTax and H&R Block, allow you to pay your tax bill via an electronic funds withdrawal (EFW) from your bank account when you e-file. The e-filing provider can pull the payment directly from your account up to the April deadline, so you don’t have to do anything extra. Just be sure you have enough funds in your account when filing. EFW is free and lets you file and pay in one seamless process.
4. Pay via the Electronic Federal Tax Payment System (EFTPS)
EFTPS is a free tax payment system provided by the U.S. Department of Treasury that allows individuals and businesses to pay all their federal taxes online or by phone. You’ll need to enroll beforehand on the EFTPS website. Once registered, you can securely schedule one-time or recurring tax payments to be electronically transferred from your checking or savings account to the IRS. EFTPS charges no fees and gives you flexibility and control over your payments.
5. Pay with IRS Direct Debit Installment Agreement
If you can’t pay your entire tax bill at once, consider setting up a monthly payment plan with the IRS. You can apply online for a Direct Debit Installment Agreement (DDIA) which allows you to pay down your balance in smaller, automatic monthly payments over 6-72 months. The setup fee is $31 but then payments are just $3 per month deducted from your bank account. Interest and penalties still apply, but this avoids further collection fees down the road.
6. Pay with Money in Your HSA Account
If you have a health savings account (HSA) and took a distribution, you may have to pay taxes on it. The good news is you can use HSA funds to pay those taxes. Just request a distribution from your HSA provider and have them send the check to the IRS instead of you. Make sure they include your name, address and Social Security number so payment is credited properly.
7. Pay with Money Orders or Cashier’s Checks
To pay by mail, you can send a money order or cashier’s check (purchased from a bank) along with a payment voucher (Form 1040-V). Make it payable to “United States Treasury” and mail to the appropriate IRS address listed on the voucher instructions. Make sure to include your Social Security number so your payment is applied correctly. Allow 5-7 days processing time via mail.
8. Pay in Cash at a Retail Partner
Believe it or not, you can even pay the IRS in physical cash. The IRS has an agreement with retail partners like 7-Eleven, ACE Cash Express and Casey’s General Store to accept cash payments in person. Take your payment voucher to a participating location, pay with cash, get a receipt and keep it for your records. Fees vary by location. This ensures same-day payment credit.
9. Pay via Wire Transfer
To make a same-business-day tax payment to the IRS, you can wire the money directly from your bank account. Instructions are on the IRS website. There is typically a $25-$35 fee to send a domestic wire transfer, plus any costs your bank charges. You’ll need to provide the IRS routing and account number. Funds need to be wired by 8pm EST to get same-day credit.
10. Pay via PayPal or Venmo
Believe it or not, the IRS now even accepts PayPal and Venmo as payment options through third-party processors. Fees apply when paying this way. PayPal charges a variable fee of around 2.35-2.40% of the transaction. Venmo charges a fixed fee of $1.50 for tax payments. While pricier than other options, it adds some novelty and convenience to paying Uncle Sam.
The bottom line is that taxpayers have numerous options to choose from when it comes to paying their federal income taxes. Whether you prefer the ease of online payments, setting up a monthly plan, or using a credit card to rack up rewards, explore which optimized payment method works best for your financial situation. As long as you pay on time and in full, you can avoid penalties and sleep easy on Tax Day. With some smart planning, you can take control of your tax bill and pay it in a way that is fast, secure, affordable, and highly convenient.
Offer in Compromise
If you cant pay your tax bill due to a permanent factor such as a job loss or business failure, you can request an Offer in Compromise (OIC) from the IRS.
- With this agreement, the IRS will agree to a reduced tax bill to be paid in full due to your circumstances.
- To be considered for an OIC, you must have filed your taxes and be current in all payment requirements to the IRS.
- You cant apply if youre currently involved in bankruptcy proceedings.
- Theres a fee for an OIC application unless youre able to meet the Low-Income Certification guidelines.
Electronic Funds Withdrawal
Electronic Funds Withdrawal (EFW) is another way to pay taxes, but in some cases, you may have to pay a small fee to your financial institution. You can only use this payment method if you e-file your federal taxes by using tax preparation software, tax professional, or IRS Free File. With EFW, you can submit one or more payments through direct debit from your bank account, and you can also schedule payments up to 365 days in advance.
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How do I pay my tax bill online?
You can also pay your tax bill using the government’s Electronic Federal Tax Payment System (EFTPS). You’ll use your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), a personal identification number (PIN), an internet password, and a secure browser to make a payment through this system.
How do I make a tax payment?
Make sure your taxpayer identification number (usually your Social Security number) is on the payment, as well as your name and address, and the tax period and form (usually Form 1040) to which the payment applies. 2. Check or money order The IRS still accepts checks and money orders.
How do I make a payment to the IRS?
Follow the details below for each way of making payments to IRS: 1. How to pay the IRS online: You can make a payment by credit card, debit card, or IRS Direct Pay through your bank account via the Internal Revenue Service payment website. Tax statistics show this is one of the most popular ways to pay.
How do I pay taxes over time?
Pay over time by applying for an online payment agreement. Once the IRS accepts an agreement, taxpayers can make their payment in monthly installments. For details on these options, people can visit IRS.gov/payments. Some taxpayers must make quarterly estimated tax payments throughout the year.