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How to Make IRS Payments for Your Taxes

August 17, 2018

How to Make IRS Payments for Your Taxes: Credit Cards

When you owe after filing returns or have tax liability from previous years, you to have to pay the IRS with actual money, but how?

Check for these five qualities to make sure your tax pro is qualified and the best for you.

The 4 easiest ways to make IRS payments

It’s 2018, but the IRS won’t accept your Bitcoin, 3-D printed money, or Venmo. When you owe after filing returns or have tax liability from previous years, you to have to pay the IRS with actual money, but how?

The IRS makes a way for you to do it. Electronic payments are the most popular and preferred, used for 89 percent of returns in 2018, but many taxpayers prefer to pay offline. Review these methods to figure out how to make IRS payments that work for your financial situation.

1. Use IRS Direct Pay

For making payments to the IRS as an average taxpayer, one easy method is IRS Direct Pay. It can be used for filing individual tax bills or making estimated tax payments directly from your bank account (checking or savings) 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).

As soon as you make a payment using Direct Pay, you get a confirmation notification that it has been submitted. The bank account information you provide is not stored in the IRS systems.

2. Electronic Federal Tax Payment System® (EFTPS)

Another secure payment method offered by the government is the EFTPS. Both businesses and individual taxpayers can use EFTPS to pay their taxes. To access the EFTPS website, you must have a secure Internet browser with 128-bit encryption. To log on, you must have the following three items:

  1. EIN or SSN
  2. EFTPS Personal Identification Number
  3. Internet Password

Using EFTPS, you can make income tax payments, employment tax payments, and estimated and excise tax payments. The site is available 24/7 and can be accessed via computer or smart phone. Additionally, you can schedule payments for up to 365 days in advance.

3. Payment by Check or Money Order

If you choose to pay via mail, then you can make your check, money order or cashier’s check payable to the U.S. Treasury. Include your name, address, SSN, daytime phone number, tax period and the tax notice or form number on your method of payment. Remember not to affix your check or money order to other documents.

4. Payment by Debit or Credit Card

To process payments made by debit or credit cards, the IRS uses standard service providers and business/commercial card networks. A processing fee is charged, which may be tax deductible. The fee varies depending on the service provider used. The IRS does not charge any fee for the transfer or the processing of the payment.

If you aren’t able to make your payment for whatever reason, contact a tax professional who can help you find the best solution for your situation.

The Top 5 Ways to Pay IRS Tax Debt in Full

July 20, 2018

Mail box full of tax letters

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.

Check for these five qualities to make sure your tax pro is qualified and the best for you.

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!

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