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6 Ways to Pay Your Income Tax Bill

6 Ways to Pay Your Income Tax Bill - TaxACT

If you owe taxes on your income tax return, the IRS gives you multiple payment options.

1. Automatic payment

If you bank online, you can set up a payment to the IRS just like you do with other bills. If you’re filing early, you can set the payment up to be paid anytime before the April 15th filing deadline.

Make sure your taxpayer identification number (usually your Social Security number) is on the payment, as well as your name and address, and the tax period and form (usually Form 1040) to which the payment applies.

2. Check or money order

The IRS still accepts checks and money orders. Checks are preferable because they’re free, and you don’t have to drive anywhere to write a check.

To safely pay the IRS with a check, write “U.S. Treasury” on the “Payee” line, not “IRS.” It’s what the Internal Revenue Service recommends, because it’s harder for someone to forge??? if they steal your check.

Include your name and address (if not already on your check), tax identification number, tax period, and tax form number (usually Form 1040).

Rather than leave outgoing tax payment checks in an unlocked mailbox, drop the envelope with your check into a post office drop box.

The IRS considers your payment date the day your envelope is postmarked.

3. Debit card

Paying your taxes can be as easy as swiping your debit card like you do to pay for groceries.

There is a fee, however, of $3.89 to $3.95, imposed by the company that provides the debit card services.

If you’d rather keep that money to buy yourself a latte, consider paying with another method, such as writing a check. It’s not much more trouble.

4. Electronic Federal Tax Payment System (EFTPS)

It’s free, safe, and convenient. You can pay your taxes online or by phone on the IRS’ own system.

You’ll need to set up an EFTPS account ahead of time and receive an EFTPS Personal Identification Number (PIN) and an Internet Password.

Don’t wait until the last minute to pay your taxes with EFTPS. You must schedule payment by 8 p.m. ET the day before you want to pay your tax.

5. Same-day wire

If it’s too late to pay your taxes on time with EFTPS, consider making a same-day wire transfer to the IRS.

Ask your bank how to make a tax payment by wire and how much they charge. Same-day wire service is sometimes used for business tax deposits.

6. Credit card

Paying your taxes by credit card is easy, but it may not be your best choice.

The IRS doesn’t charge you a fee for paying with plastic, but the service providers who make it possible do. You’ll pay a convenience fee based on the amount you are paying, plus interest on your card balance if you don’t pay it off right away.

What about cash?

Never send cash to the IRS through the mail. You may be able to pay by cash at your local IRS office.

If you owe more tax than you can afford to pay now, pay what you can by the April 15th filing deadline. Then, pay as much as you can, as soon as possible, to pay off the tax.

The IRS charges interest and penalties based on the amount you owe and the time it is past due, so paying the balance is not an all-or-nothing deal.

If you can’t pay your tax within a short period of time, contact the IRS about getting additional time – generally 60 to 120 days – to pay.

If you need more time, you can also apply for an installment agreement with the IRS.

Never put off filing your income tax return because you can’t pay all the tax due.

The IRS charges a separate penalty for late filing and late payment of tax – don’t pay both if you don’t have to!

What’s the most income tax you’ve ever owed when you filed your return?

Photo credit: Robert S. Donovan via photopin cc

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About Sally Herigstad

Sally Herigstad is a certified public accountant and personal finance columnist and author of Help! I Can't Pay My Bills, Surviving a Financial Crisis (St. Martin's Griffin). She writes regularly at CreditCards.com, Bankrate.com, Interest.com, RedPlum, and MSN Money. She is an experienced speaker and a member of Toastmasters International. Follow Sally on Twitter.