As you wrap up on filing your tax return this year, the next step is obviously to pay any amount that is due (hopefully you owe IRS taxes, as tax refunds are withholding tax allowance blunders that result in interest-free loans to the federal government). This year, you should consider paying your taxes online, and I’ll share how you can do it.
Why pay your taxes online? First, doing so eliminates the hassle of writing out and mailing checks, the cost of stamps, and saves paper. What’s not to like about that?
Next, paying taxes online is quicker than by mail. Payments usually go through in a matter of days, not weeks, so you can more accurately control your checking account cash flow. Getting payment in quicker can also help prevent tax identity theft fraud.
And finally, paying taxes online provides instant confirmation and removes the uncertainty of getting your tax payment in by the IRS deadline. With the IRS processing millions of returns and the not insignificant probability that your payment could get lost in the mail or worse, come into the hands of the wrong person. Paying your taxes online can help you avoid those rare, but significant risks.
Convinced? Then let’s cover how to pay your taxes online.
How to Pay your Taxes Online to the IRS
There are a few ways to pay your IRS taxes online:
- IRS Direct Pay: allows you to pay using a bank debit without creating an account.
- EFTPS: similar to Direct Pay, but requires a registered account and IRS verification to use. Businesses should use EFTPS to pay taxes online. Accounts can take weeks to be verified and used the first time.
- Electronic Funds Withdrawal: can be used when e-filing with tax prep software.
- Pay by credit or debit card. If you pay your credit card balance in full (mandatory here), you can actually profit by paying your taxes with a credit card.
How to Use IRS Direct Pay to Pay your Taxes Online
I want to dig into IRS Direct Pay a little deeper, as it was just launched two years ago, and offers the best combo of ease of use and trackability. Direct Pay allows you to make a simple bank payment online without the hassle of creating an account as you must do with the Electronic Federal Tax Payment System (EFTPS). This is kind of a big deal, because it can take weeks for the IRS to verify new EFTPS accounts, and once verified, they are reportedly difficult to use.
You can use IRS Direct Pay to pay taxes due on your annual return, tax extension payments, estimated quarterly payments, and more. And there is no fee to use the service.
Another big benefit of Direct Pay is that your bank account information is not stored – rather, it is only used to process your payment.
In order to use IRS Direct Pay:
- Go to the IRS Direct Payment tool.
- Choose what you are paying towards (i.e. 1040, 1040 ES, Civil Penalty), the reason (i.e. tax return, extension, amended return), and the year.
- Enter your personal details, including name, filing status, address, SSN, and date of birth.
- Enter bank account details (helps to have a check handy for your bank account number).
- Review details.
- Get your confirmation.
On the last one, I’d recommend writing your confirmation number down or doing a ‘Print’, save as PDF so you have record. With the confirmation number handy, you can cover yourself and also look up a Direct Pay payment later on, if needed.
Note: payments typically take 2 days to process. Also, businesses cannot pay taxes online using Direct Pay – they must use EFTPS.
Which method will you use or have you previously used to pay your taxes online with the IRS? And why?
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I just submitted mine online. However, use caution! One online product could not figure out Roth IRA distribution for my first time home purchase.
I use online tax payment for convenience and for saving purposes. When I pay online, I still get 1.5% cashback on my credit card. When I pay online, I don’t have to waste a check, envelope, and postage. When I pay online, I won’t have to fall in line or mail my payment.
Don’t you net lose money with credit card? The credit card transaction fees listed on IRS.gov were ~2.5%.
I use EFTPS for all estimated payments, 1040-ES and payment of any tax owed on 1040. The nice thing about EFTPS is that it allows you to schedule all payments in advance, so for me I would schedule all 5 payments. The site records and keeps your all your personal information and bank information as well as payment history and EFT confirmation numbers in your account. As GE said, there is a startup delay but once it is setup only NEW information about future payments is required.
Good points – thanks for adding.
Last year I had a substantial tax payment and did pay by credit card. I paid a 1.87% fee, but got 2% back on my credit card (Citi double cash). I made a few dollars ($1.67 per $1000 paid as you get 2% on the fee as well) and had added convenience. As a small bonus, it gave me roughly an extra month to pay, although I didn’t use it for that.
I want to use the IRS direct payment tool. But I am filing my return for the first time and it requires you to provide information from one of your previous returns to verify your information. Do you have any idea how I can use this tool in spite of not having a previous return?
Jennifer
This is my question as well! I have googled and scanned FAQs extensively, this comment is the only place anyone has even brought up this issue, no articles or resources even acknowledge it, much less offer any kind of help.
It’s a straightforward issue, and it’s very frustrating to find no attempts to address it in any way.