How to Make IRS Payments for Your Taxes
September 26, 2019
It’s 2019, but the IRS won’t accept your Bitcoins, 3-D printed money, or Venmo. When you owe after filing tax returns or have back taxes to deal with, you to have to make IRS payments with actual money, but how?
The IRS ensures there are multiple ways to pay them back. While you can go through the hassle of making an appointment at your local Tax Assistance Center to pay in cold hard cash, there are easier ways to pay up without having to leave the house.
Electronic payments are the most popular and preferred payment method, used for 89 percent of returns in 2018. But if you’re a taxpayer who prefers to pay offline, you’ve got choices, too.
Review these payment options to figure out how to make IRS payments that work for your financial situation.
The 4 Easiest Ways to Make IRS Payments
1. IRS Direct Pay
For making payments to the IRS as an average taxpayer, one simple method is IRS Direct Pay.
IRS Direct Pay can be used for filing individual tax bills or making estimated tax payments directly from your checking or savings account to the IRS. This feature has the added advantage of being free of charge.
To use Direct Pay, you need to have a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
While you can use IRS Direct Pay to make an online payment on your regular web browser, you can also use Direct Pay on the IRS2Go app on your mobile device. You can find the free IRS2Go mobile app on Google Play, the App Store, or Amazon.
If you request it, you will get a confirmation notification via email as soon as you make a payment using Direct Pay. The bank account information you provide is not stored in the IRS systems.
Direct Pay does have some limitations. It is only available Monday through Saturday from midnight to 11:45 p.m. ET and Sunday from 7 a.m. to 11:45 p.m. ET.
The system for Direct Pay does not save your information, so you’ll have to re-enter everything if you return to make another payment. You also cannot make more than two payments within a 24-hour period.
2. Electronic Federal Tax Payment System (EFTPS)
Another secure payment method offered by the government is the Electronic Federal Tax Payment System (EFTPS). Both businesses and individual taxpayers can use EFTPS to pay their taxes.
You must have a secure Internet browser with 128-bit encryption to access the EFTPS website. To log on and enroll, you must have the following three items:
- EIN or SSN
- EFTPS Personal Identification Number
- Internet Password
Once you enroll, the EFTPS system will save your information so it’s easier to make payments in the future.
For payroll taxes, businesses must use EFTPS for deposits. Otherwise, you could be penalized.
EFTPS is highly suggested for large payments. Using EFTPS, you can make income tax payments, employment tax payments, and estimated and excise tax payments.
This payment method is free to use, and you’ll receive confirmation emails with every transaction you make. Another similarity to Direct Pay is that you can cancel or edit payments up to two business days before the scheduled payment date.
The site is available 24/7 and can be accessed via computer or smartphone. Additionally, you can schedule payments for up to 365 days in advance.
3. Payment by Check or Money Order
Not a fan of paying online? You can pay via mail with a check, money order, or cashier’s check made payable to the U.S. Treasury.
Make sure to include the following information on your check, money order, or cashier’s check:
- Your name
- Social Security number
- Daytime phone number
- Tax year
- Tax form or tax notice number
You’ll want to send this form of payment along with a completed Form 1040-V. Don’t staple or paperclip the check or money order to this form.
Be sure to mail both the form and payment method to the address that corresponds to your state listed on Form 1040-V.
4. Payment by Credit or Debit Card
To process payments made by debit or credit cards, the IRS uses standard service providers and business/commercial card networks. The three payment processors they use are PayUSATax, Pay1040.com, and Official Payments.
The provider will charge a fee, which varies based on the service provider used. This processing fee may also be tax-deductible depending on your situation. No part of the service fee goes to the IRS.
Keep in mind that you usually can’t cancel payments made by debit or credit card.
Not all tax forms are payable this way and some higher tax debts may require some extra coordination with your provider. However, it’s an easy way to settle your tax debt and gain some quick peace of mind.
What to Do If You Can’t Make Your IRS Payment
If you aren’t able pay the IRS for any reason, you’re not out of options.
You may be able to qualify for an IRS installment agreement. This payment plan would allow you to make regular payments that are more affordable for you than your entire balance at once.
Depending on your circumstances, you also could be eligible for an Offer in Compromise, which could let you settle your tax debt with the IRS for less than you owe.
To figure out what options you qualify for, contact us. One of our tax professionals can help you find the best tax debt relief solution for your situation.
4 Ways the #PayMyTaxes Contest Could Change Your Life
January 21, 2019
We couldn’t be more excited to finally announce our first-ever #PayMyTaxes Contest. MoneySolver’s #PayMyTaxes Contest gives entrants a life-changing opportunity to have up to $50,000 in tax debt paid off. Yep, you read that right. $50,000! We’ve even been interviewed by News4Jax about this awesome opportunity.
Here are four ways that the MoneySolver #PayMyTaxes Contest could help you change your life:
1. Winning the #PayMyTaxes Contest = reduced stress and space to finally breathe.
Studies have shown that people who struggle to pay off their debts are more than twice as likely to experience depression and anxiety. But what if that struggle was lifted off your back?
If you were to win up to $50,000 in tax debt off your back, you’d be able to take much more than just a huge sigh of relief. The winner of the #PayMyTaxes Contest will be able to brush that tax debt stress off and bask in some serious relaxation.
2. Higher likelihood of avoiding unpaid tax debt risks, like wage garnishment and liens.
No one wants to face collection activities. But if the amount you owe decreases (or disappears), it’ll be easier for you to avoid the consequences of unpaid tax debt.
Of course, if you still have some tax debt left over after that $50,000 is paid off, you’ll still have to pay the IRS the remaining amount to avoid collections. However, you’ll be a little closer to freedom from tax debt!
3. Lowered tax burden, which lessens your financial load.
Paying off your tax debt in full can be nearly impossible for some people. But the winner of the #PayMyTaxes Contest will suddenly find themselves free from up to $50,000 in tax debt.
That’s a lot of money that you’ll no longer have to pay, which means a much lighter financial load for you in the long run.
4. Lessened financial load = more freedom.
No more worrying about how your tax debt might affect your spouse or what happens with your tax debt when you die. With less of a financial burden on your shoulders, you’ll be able to explore the things you love and stop worrying about your tax debt.
Instead of having to pay $50,000 towards your IRS tax debt, you’ll be able to use that money to live your life. The cash that you would’ve used to pay the IRS could go towards something much more meaningful to you. And honestly, if given the choice, wouldn’t you rather spend $50,000 on yourself than on your tax debt?
So, what are you waiting for? With the chance to win $50,000 towards your tax debt and change your life, send in your application for the #PayMyTaxes Contest before the deadline of May 31, 2019. We’ll be notifying the lucky winner on or around July 4, 2019.
Click here or click through the image below to learn more and apply.
Is Your Passport at Risk Because of Tax Debt?
July 30, 2018
Traveling around the world is already hard enough – and now for those with tax debt, it’s even harder. The IRS is now enforcing procedures that will put your passport at risk if you have “seriously delinquent tax debts.”
How Is My Passport at Risk?
Though the law behind this plan has been in place for over two years, the IRS is now implementing and enforcing the policy. The 2015 Fixing America’s Surface Transportation (FAST) Act states that the IRS can send notice to states to deny, limit, or revoke your passport if you owe delinquent taxes.
Under the FAST Act, an individual has “seriously delinquent” liability if:
- The IRS has assessed the debt,
- The debt is over $50,000 in back taxes, penalties and interest, and
- The IRS has filed a lien to secure the liability or the IRS has issued a levy to recover the liability due.
This amount of debt may seem hard to accumulate. However, one mistake or ill-advised taxable event can land you there quickly. In the same way, failing to plan for your self-employment income or defaulting on a secured loan can cause the debt to pile up. Fortunately, there are ways to prevent having your passport revoked, even if you meet the criteria above.
How to Avoid and Resolve Losing Your Passport
Passport revoked? It’s not the end of your travels. The IRS and State Departments can reinstate your passport if it has been suspended. However, they will only do this if you’ve paid back your debt or made plans to do so.
Your passport will not be revoked under the following exceptions:
If you received a notice of passport revocation before you established a formal resolution with the IRS, you can resolve it – but it won’t be overnight. Paying your debt back in full is the quickest way to release your liens and get your passport back, but that might not be an option for you.
Resolve the Issue with Professional Help
You can enter into an installment agreement with the IRS, which can take 30 days or longer to process. A successful Offer in Compromise will also reinstate your passport; however, this can be a very lengthy and in-depth procedure with strict guidelines. Unfortunately, Currently Not Collectible status (proof of hardship and inability to pay your debt), will not grant you the passport back.
MoneySolver knows how to deal with the IRS red tape. We can quickly show proof that you’re getting help with your tax debt situation. Avoid having your passport at risk due to aggressive IRS actions and get your life (and travels) back on track.
Here’s What to Do with an IRS Notice of Deficiency
What is an IRS Notice of Deficiency (CP3219A)?
Your taxes are filed, and you’ve finally kicked back in hopes for a compliant tax year. But what happens when things don’t line up with your taxes? An IRS Notice of Deficiency, or Notice CP3219A, means there is a discrepancy in your tax information. This IRS notice lets you know that the information you reported on your tax return is different than what third parties, such as your employer or financial institutions, have reported to the IRS. The IRS will make the change to the amount of tax you owe based on the third-party reports automatically.
Agree with the changes? Great!
If you agree with the changes made by the IRS and you have no additional income, credits or expenses that you need to report, you’re all set. You don’t need to amend your return. All you have to do is sign the notice using Form 5564, Notice of Deficiency – Waiver and send it to the IRS. If you have additional income, credits, or expenses, amend your tax return and file Form 1040-X.
What to do if you don’t agree with the Notice of Deficiency
If you disagree with the notice, contact the IRS over the phone or send a written explanation supporting your position. You can also contact the third party that reported the information in question (e.g. employer) and ask them to correct it. The IRS will let you know how long you have to contest the notice. Don’t have your return handy to compare? Request a copy of your tax return from the IRS by sending Form 4506.
Be aware that the IRS will charge penalty and interest on the taxes that remain to be paid if the liability has increased. Immediately address the changes, and if they’re correct, pay the balance to resolve your back taxes ASAP.
Can’t pay the tax liability?
You can apply for an IRS tax debt payment plan. After receiving the Notice of Deficiency, try to resolve the issue immediately. Penalties and interest are charged on unpaid taxes every month until the entire amount of tax debt is paid in full. In other words, you could be paying a lot of extra dollars for your tax liability.
You don’t have to go through foggy tax issues alone. Reach out to a tax professional if you’re unsure how to approach an IRS notice, or if you can’t pay your tax liability. Without addressing it early on, you’ll receive additional notices that will eventually end in IRS collective actions.
The Top 5 Ways to Pay IRS Tax Debt in Full
July 20, 2018
Taxes are a sure thing if you live in the U.S. And when you owe Uncle Sam money, it can make a ding on your finances – and everyday life. That’s why if you owe, you must pay IRS tax debt ASAP.
Thankfully, the IRS offers several programs and services that help taxpayers that owe them money. The method you choose will depend on your specific situation with the IRS. Knowing what to do isn’t always easy. First, analyze your situation and organize all of your financial documents. From there, you can determine if one of these payment methods applies to your situation.
The top 5 methods to find a way to pay IRS tax debt:
1. Repay the full tax debt amount
The fastest and most efficient way to repay the debt you owe to the IRS is to pay the complete amount you owe. This is not an option for many who owe the IRS, which is why the IRS provides other programs and services to make paying your debt possible. Speak with a tax professional to see which IRS payment agreements you may qualify for.
2. Sell your assets (before the IRS takes them)
You may have to say goodbye to your yacht or untouchable sports car if you owe the IRS. By selling assets, you can apply the funds to pay IRS tax debt. Do this as soon as possible before the IRS issues a lien. A lien will make it more difficult to sell your property if you wait too long.
3. Withdrawal from your investment accounts
Do you have any investment accounts like a pension or 401k? If so, you could make an early withdrawal to pay off your debt. If you opt for this route, make sure you pay taxes on the withdrawn money or you could owe the IRS all over again.
4. Dip into property equity
Depending on the housing market, it may be difficult to take out a home equity loan or to refinance. If it makes sense for your situation and the market climate, applying home equity funds can be a viable method for paying your tax debt.
5. Use a credit card or bank loans
Using credit cards or bank loans may seem like merely trading one debt for another. However, the interest rate on credit cards and bank loans tend to be less than IRS interest and penalties.
Don’t wait until the letters pile up
When the IRS sends you a notice to demand federal payment, it’s time to kick it into gear. The IRS wants you to fully pay the debt within 10 days of the notification. This is doable via any of the five methods above to repay your tax liability. If you’re unable to use these resources or have a tax debt amount that you know you can’t pay, a tax professional can negotiate with the IRS on your behalf to reach an agreement. Don’t wait until your next notice letter hits the mailbox to pay IRS tax debt in full!
Tax Balance Due: 3 Steps to Address IRS Notice CP14
July 16, 2018
Unfortunately, filing your tax return isn’t always your only contact with the IRS for the year. If the federal tax agency finds errors on your return that lead to an assessment, they will send Notice CP14 for collection. This isn’t a time to freak out as long as you follow the appropriate steps to address the issue.
If applicable, you’ll receive your “balance due” notice within four weeks of your return being processed. This letter is the first contact from the IRS to collect overdue taxes. If you ignore or neglect to pay what’s owed, then the IRS sends additional notices and begin aggressive collection actions, like liens and levies. Here are three steps to take when you get your “balance due” notice:
1. Review the Notice CP14 Details
The first thing to do when receiving Notice CP14 is to know why you received it. The notice includes the following:
- The tax year for which taxes are due
- The notice issue date
- Your Social Security Number
- IRS phone number
- Tax amount owed
- Payments and credits
- Penalties charged on taxes owed
- The final amount due to be paid
- The deadline for paying the amount owed
The Notice CP14 also includes information on payment options, penalties, and interest.
2. Determine If the IRS Is Correct
Before agreeing or disagreeing with the Notice CP14, check to see if your return had errors that led to the assessment of taxes due. If you find errors, you will need to pay the amount owed before the payment deadline in order to avoid further penalties and interest.
If you don’t see any errors or you find a different amount than what the IRS determined, you can call the IRS on the phone number indicated on the Notice CP14. An IRS representative will assist you in resolving the issue.
3. Pay the Amount Due
You can make the payment indicated on the Notice CP14 using IRS Direct Pay, a service that allows you to electronically pay your taxes directly from your savings or checking account. Alternatively, you can pay by credit or debit card.
If you can’t pay the full tax owed, either send a request to the IRS to receive up to an additional 120 days to pay or set up an Installment Agreement payment plan. An Installment Agreement allows you to pay your tax bill in fixed monthly installments. Get help from a tax relief professional before requesting your Installment Agreement to ensure you get the best tax debt resolution for your situation.
Form 433-A: How the IRS Determines Your Ability to Pay
July 15, 2018
Tax debt is nothing to brush off, especially when you owe an outrageous amount. If you can’t afford your tax debt, the IRS has to decide if – and how – you’ll be able to pay. This post will tell you how the IRS uses Form 433-A to determine if an agreement is in your future.
When you apply for a payment plan such an installment agreement, Offer in Compromise, or Currently Not Collectible status, The IRS asks you for a financial statement with Form 433-A. This form provides information about your total income and assets. The IRS uses this information to determine your ability to pay.
What the IRS considers for your payment ability
- Any assets that you can take a loan against (e.g. home),
- Any asset such as your car, boat, or house that you can sell to pay the tax debt, and
- Property that is yours but is held by someone else, such as funds in bank accounts, retirement accounts, etc.
Information to include on Form 433-A
- Your checking, savings, online (e.g. PayPal) financial accounts
- Your stored value cards (e.g. payroll card, child benefit card)
- Stock, bonds, mutual funds, and other investments
- Available credit on credit cards
- Your gross monthly wages and/or salaries without deductions, or net business income
- Any real estate, vehicles, and personal assets
- Current market value of your assets
If you’re self-employed, you must disclose your business bank accounts and business assets with the IRS.
Allowable Living Expenses
Though the IRS has to leave you enough money to live (per the allowable living expenses), the agency will review your specific financial needs. There is a place on Form 433-A for you to include necessary total living expenses, including:
- Food, clothing and miscellaneous
- Housing and utilities
- Vehicle ownership and operation
- Public transportation
- Health insurance
- Out-of-pocket health care costs
- Court ordered payments
- Current year taxes
- Secured debts
- Other expenses such as student loans, unsecured debts, and tuition fee.
Fresh Start Program
Based on your financial statement, the IRS determines your ability to pay and decides whether to approve your application for a payment plan or not. Under the Fresh Start Program, the IRS may not ask for a financial statement if you owe $50,000 or less in tax debt and apply for an Installment Agreement. For tax debts that are greater than $50,000, and to request a tax debt reduction, you will need to provide the IRS with a financial statement (Form 433-F).
If you’re unsure if you qualify for any IRS debt repayment programs or forgiveness programs, our licensed tax professionals can review your specific situation to see if you qualify. We work with the IRS on your behalf, so you don’t have to navigate the complex tax laws alone.
Why Was My Refund Applied to Back Taxes?
May 27, 2018
Waiting for your refund check can make you feel as excited as a kid the day before your birthday. When you get that envelope from the IRS, you’re ready to tear it open and reveal your hard-earned money. But what does it mean when, instead of your refund check, you get a notice informing you that the IRS applied your refund to unpaid taxes? This happens when the IRS finds that you owe back taxes. They automatically use your refund amount to satisfy the full amount or a part of your tax debt.
What is this notice?
The IRS sends Notice CP49 to inform you about how much tax you overpaid over the last year (i.e., the amount of your refund) and how much of it the IRS used to fulfill your tax debt.
The Notice CP49 means that you have a tax debt or there are other federal taxes that have remained unpaid. If your refund money covered for the entire tax debt, then you don’t need to take further action. If your refund money didn’t satisfy your entire tax debt, then you can either pay the remaining balance in a lump sum or qualify for a payment plan.
Why was my refund applied to back taxes?
Many times, the IRS discovers that a taxpayer is under tax debt after they review their information and make changes to the tax return. In such cases of underpayment of taxes or owing of other tax debts, if the taxpayer has a refund, the IRS will apply the refund to the tax debt.
Simply put, if the IRS discovers that you have any unpaid federal taxes, they will satisfy the maximum amount of debt using your tax refund.
What if my refund didn’t cover the full amount of my tax debt?
Do you still owe federal taxes after the IRS used your refund? And can you not pay the balance in a single payment? Then you can use an Installment Agreement to pay the remaining tax debt in monthly installments. If your financial condition does not allow you to pay the balance, then you can consider applying for tax debt reduction plans such as Offer in Compromise or Partial Payment Installment Agreement.
Already making payments to the IRS under a payment plan? Great! You should continue to do so. The IRS will apply your refunds to your tax debt until your entire tax debt is paid off.
What if I do not have tax debt?
If you don’t have a tax debt, then you should immediately contact the IRS to correct their mistake. Your CP49 notice should have a toll-free number in the top right corner that you should use to call the IRS. Make sure you have your paperwork – including any canceled checks and amended returns – ready when you call.
Did you file jointly with your spouse? It’s also possible that the IRS applied your refund to your spouse’s tax debt. If so, you have options to claim your share of the refund.
Was your refund applied to back taxes? Don’t fret! Give us a call and we can help you figure out the best way to resolve your tax debt problem.