Whether you’re making quarterly payments ahead of your tax filing or paying your full tax liability when you file your return, paying taxes is an essential part of financial responsibility. The Internal Revenue Service (IRS) provides several convenient electronic payment methods to ensure timely and secure payments. Read why we recommend making electronic payments instead of sending a check, here. In this article, we’ll guide you through understanding the various options, benefits, and steps for making electronic payments to the IRS.
Benefits of Paying Taxes Electronically
There are four major benefits to paying taxes electronically:
Convenience – electronic payments can be made at any time, from anywhere, without the need to visit a bank or mail a check.
Speed – payments are processed quickly, reducing the risk of delays and potential late fees.
Security – the IRS’ electronic payment system uses encryption and other safeguards to protect your financial information. It eliminates the need to mail a check and risk it being lost or stolen.
Confirmation – immediate confirmation of payment receipt and application provides peace of mind, and proof of compliance. We recommend saving the proof of payment for your records.
Electronic Payment Options
The IRS offers multiple electronic payment platforms to suit various needs.
Direct Pay
Allows taxpayers to make payments directly from a checking or savings account.
No registration is required, and there are not fees for using the service.
Appropriate for paying individual’s taxes such as quarterly estimated taxes, balances due, or payment agreements.
Electronic Federal Tax Payment System (EFTPS)
Available for individuals, businesses, and financial institutions.
Requires advance registration but offers a highly secure platform for scheduling payments in advance, and managing payment processing.
Users can schedule payments up to one year in advance and can check payment history for up to 16 months of completed payments.
Debit or Credit Card Payments
Payments can be made using authorized third-party processors.
Convenience fees apply, and these fees are paid to the processor, not the IRS.
Useful for those who prefer using a card or earning rewards.
IRS2Go Mobile App
The IRS’ official app allows taxpayers to make payments, check payment history, and get payment reminders.
Works with Direct Pay, EFTPS, and debit/credit card payments
Third-Party Payment Processors
Authorized providers facilitate payments via digital wallets, such as PayPal, or through other electronic methods
Service fees do apply
How to Make an Electronic Payment
First choose a payment method. Select the payment method that works best for your preferences, your financial institutions, and your payment frequency/record retention needs.
Next, prepare your information. You’ll need to have your social security number or employer identification number ready and know your tax type, the payment amount, and the year for which you are making a payment or payments. If you choose Direct Pay or EFTPS, you’ll need to have your bank account details on hand as well.
Once you have your information collected and available, access the selected payment system. You can find easy access to all the platforms discussed on this IRS page. You can also download the IRS2Go app from your app store on your phone.
Upon accessing the preferred payment method, you’ll be provided with instructions specific to that platform. Follow the instructions and double-check your entries before submitting.
Finally, once your payment has been submitted, print the confirmation page or download the receipt after payment. This will serve as proof of payment if you need to resolve a dispute. To keep everything organized, it’s a good idea to keep this payment receipt with the related tax return information.
Tips for Using Electronic Payments
When using electronic payment processing, there are a few key things you can do to ensure everything goes as smoothly as possible – and intercept issues before they become big problems.
Start by planning ahead – and reading this article is part of that step! Electronic payment platforms like the IRS’ EFTPS allows you to schedule payments in advance, and making payments electronically reduces the processing time of your payment. By planning ahead to avoid last-minute payments, and using faster payment platforms, you can ensure timely processing and avoid late payment penalties and interest charges.
After you’ve made the payment, monitor your bank account or card to confirm that the payment was processed. If you don’t see the payment charge to your account within a few business days, review your payment receipt to ensure the correct payment information was provided, and check your payment history (if available) within the platform or reach out the to IRS. Unless you scheduled a payment for a future date, most payments should process within a week.
Make sure you understand the fees. As discussed above, certain platforms and credit card processors charge a convenience fee.
Schedule payments using EFTPS to get ahead of recurring payment and future estimated payments for better financial planning.
Frequently Asked Questions
Are electronic payments mandatory?
No, but they are encouraged due to their convenience and efficiency.
Can I cancel a scheduled payment?
Yes, depending on the method. For example, EFTPS allows cancellations if requested in advance.
What happens if I make an error?
Contact the IRS immediately to correct any errors. Keep all payment records to expedite resolution.
Conclusion
Electronic payments to the IRS offer a secure, fast, and convenient way to meet your tax obligations. By understanding the available options and following best practices, you can simplify the payment process and avoid unnecessary stress.
If you have further questions or would like additional guidance, reach out to us!