With the entire earth under lockdown, paying taxes has become highly imperative. The good news is that the IRS (Internal Revenue Services) is offering coronavirus relief to the taxpayers. With every passing year, the numbers of Americans filing their income tax returns through digital means are increasing.
To make things simpler and smooth, the government has now partnered with many private-sector companies for facilitating e–tax payments. Transferring money electronically is the new-age method approved by youngsters. In fact, payments done through phone applications have shown a surge implying how tax payments have become faster and appealing.
With the ease of making tax payments electronically, there comes the complexity and difficulties associated with it. Most people tend to make common tax filing mistakes whether smaller or bigger. Therefore it is advisable to double-check the amount and details linked to it whenever you are filing a tax payment online.
This year, the IRS has extended the deadline to July 15 for filing and paying your taxes. This means that after July 15 the government will charge a 0.5% penalty every month until it reaches 25% of what you owe to them. No one wants to pay penalty for the late payment of their federal tax bills, so here are 7 ways one can make the payment to IRS.
- IRS2Go app
IRS2Go is a mobile application that is easily available on Google Play, Apple App Store, and Amazon App Store. It has an amazing option of using IRS Direct Pay, to pay your taxes online. Direct Pay enables you to make the payment from your checking or saving account. It is a simple and hassle-free way that you do not have to pay any fees or do any sign-ups to access it. To check out Direct Pay, one can visit the official IRS website and select ‘direct pay’. You can schedule advanced payment and make changes up to two business days of the scheduled date, or even pay on the same day.
Even though Direct Pay is a relatively easier and faster way of payment, the catch is that you have to enter your personal identifying number every time you use this commodity. It is because the system does not save up any information nor do you have an option to sign up. Direct Pay can also be used to handle a myriad of payments related to Form 1040. Using Direct Pay, you cannot make two payments in one day.
The online electronic method of tax payment is the EFTPS (Electronic Federal Tax Payment System). Here you can schedule your payments in as advanced as 365 days. The website also processes tax payment free of cost. One has to go to the IRS EFTPS Website and submit your identity and bank information. It takes about a week for a PIN to arrive through your mail. Then set up your password to go back online and pay your taxes by authorising ACH transaction from your bank account. In this way, you will not have to keep re-entering your details every time you use the website.
Online payment is a good option for those who have large business payments to handle in order to schedule all your estimated taxes to be paid at the same time. Similar to Direct Pay, EFTPS can process all kinds of federal taxes including Form 1040, and can allow changes in payment schedules made up to 48 hours before the due date.
- Same-day wire-transfer
Using a bank or a non-bank provider, same-day electronic money transfer can be made in this method. It costs depending on your bank fees, commonly around 25$. Even though it is a speedy way to transfer money, one has to fill out and submit the IRS Same-Day Taxpayer Worksheet to your bank every time you make the IRS payment. Once you process the transfer, it is irreversible.
- Credit/Debit card
There are many payment processes available online that help you pay using your credit or debit cards. However, it involves a convenience fee based on the service provider you choose and your card. It is a flat fee for your debit cards and percentage fee for your credit cards based on how much amount you have to pay.
For instance, on the IRS official website, you can pay using your credit card. Additionally, you can use the IRS2Go mobile app or IRS software during e-filing. You have to keep in mind that your information goes through a third-party.
Some IRS-approved companies that accept payments via credit, debit cards, or digital wallets are PayUSATax.com and Pay1040.com. Also do not forget to pay off the credit card charge in full, since you could start racking up interest on the tax amount you paid.
For anyone scared of cyber-hacking and other fraudulent identity-theft processes (and fear getting scammed), this is the best (and the only) method to pay your taxes. One can book appointments and make payments in the IRS office.
The second option is where the IRS agent partnered with Official Payments and PayNearMe allows the taxpayers to make their payments in local retail shops like participating 7-Eleven stores. This is quite a tedious process, as there are chances of you not getting your work done since the IRS offices are pretty busy. Usually, $3.99 is charged for every payment.
For any issues regarding payments, one can contact the PayNearMe customer service. It generally takes five to seven business days for your payments to get processed, so one has to plan well in advance for paying taxes before the due date. Now, since we are under lockdown, this option is not very effective to pay your taxes.
- Money Order or cheques
One can also go old-school and pay through money orders or cheques. Ensure that your check or money orders contain your name, address, daytime phone number, Social Security Number (or SSN), tax year, and related tax form or notice number.
Similar to the cash method of payment, you can submit these to nearby participating retail stores or the IRS office after booking an appointment. Never send them out through the mail. Remember that they do not take single checks or money orders above $100 million. So, one has to submit multiple payments as an alternative or make a same-day wire payment.
EFW (Electronic Funds Withdrawal) is a convenient and easy method to e-file and e-pay your taxes. It is generally free but it will not harm in asking your institution or bank about any fee they might charge. This single-step method to pay taxes is safe and secure. One can set up a direct debit from your account by a tax professional or on your own through any authorised tax preparation software.
This option is viable only to those who e-file. It is a simple process where you enter your bank details into your software program. If there is any transfer of incorrect funds from a bank account, the treasury will return the funds to you.
Name: Sapna Singhal
Bio: Sapna Singhal is a Senior Content Writer at My Banking Information, a Finance Blog which aims at delivering the financial knowledge to non-financial people in a simpler manner. Check out her website https://mybankinginformation.com.