This article has been updated for the 2023 tax season. As you wrap up on filing your tax return this year before the tax deadlines, the next step is obviously to pay any amount that is due (hopefully you owe IRS taxes, as tax refunds are getting back the withholding tax overpayments that had resulted 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, it protects against potential bank account fraud from sending out your bank account information, it saves the cost of stamps, and it saves paper. All good things.
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, as can using an IRS Identity Protection PIN, which is now available to all taxpayers.
And, finally, paying taxes online provides instant confirmation and removes the uncertainty of getting your tax payment in by the IRS deadlines. 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. Note: accounts can take weeks to be verified and used the first time, so you’ll need to plan ahead, as this may not be a good last minute option.
- Electronic Funds Withdrawal: can be used when e-filing with tax prep software or a tax professional.
- Pay by credit or debit card or digital wallet. If you pay your credit card balance in full (consider that mandatory), you can actually profit by paying your taxes with a credit card. If you pay your balance in full and your credit cards rewards are greater than your processing fees, then paying the IRS with credit cards can be your best option.
How to Use IRS Direct Pay to Pay your Taxes Online
I want to dig into IRS Direct Pay a little deeper and offers a good 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 the reason for payment (e.g. tax return, estimated payment, extension, amended return), what you are paying towards (e.g. 1040), and the tax 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 and routing numbers).
- 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?