Federal Tax Payment Procedures

April 6th, 2011

There are several options which are available to you if you will be required to send an addtional tax payment to the U.S. Treasury.  However, do NOT send cash!  Among the choices which you have are:

  • Use the Electronic Federal Tax Payment System (EFTPS) at http://eftps.com;
  • File your tax return electronically (e-file) and use the free electronic payment system (direct withdrawal) from your checking or savings account;
  • Pay via a telephone call using your credit or debit card (there is a “convenience charge” if you use this method);
  •  Enclose your payment (check, money order etc) with your tax return.  If it is available, include the payment voucher (Form 1040-V) which provides all of the essential information for your payment;
  • If necessary, pay all that is possible and request that you be approved for installment payments using Form 9465 (“Installment Agreement Request”) for the unpaid balance.

Ten Things You Should Know About Making Federal Tax Payments  

Are you making a payment with your federal tax return this year? If so, here are 10 important things the IRS wants you to know about making tax payments correctly.

  1. Never send cash!
  2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
  3. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.
  4. Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit the IRS website at http://www.irs.gov and search e-pay, or refer to Publication 3611, IRS e-File Electronic Payments for more details.
  5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
  6. Enclose your payment with your return but do not staple it to the form.
  7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
  8. Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
  9. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently.
  10. For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at http://www.irs.gov.

Links:

Three Ways to Pay Your Federal Income Tax

If you owe taxes but can’t pay the full amount by the April 18 deadline you should still file your return on time and pay as much as you can to avoid penalties and interest. You should also contact the IRS to ask about alternative payment options. Here are three alternative payment options you may want to consider:

1. Additional Time to Pay Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at http:www.IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 60 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.

2. Installment Agreement You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, Installment Agreement Request, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on http.www.IRS.gov.

3. Pay by Credit Card or Debit Card You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Debit Card, or a NYCE, Pulse or Star Debit Card. To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95.  Do not add the convenience fee or flat fee to your tax payment.

The processing companies are:

Link2Gov Corporation:

To pay by debit or credit card: 888-PAY-1040 (888-729-1040), www.pay1040.com

RBS WorldPay, Inc.

To pay by debit or credit card: 888-9PAY-TAX (888-972-9829), www.payUSAtax.com

Official Payments Corporation:

To pay by debit or credit card: 888-UPAY-TAX (888-872-9829), www.officialpayments.com/fed

For more information about filing and paying your taxes, visit http:www.IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at http://www.irs.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).

Links:

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Posted by Bill Seabrooke

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