IRS offers options to pay taxes due
You’ve done your taxes, and now the ugly truth is staring back at you. Instead of a refund or zeroing out, you owe Uncle Sam money.
If you have enough money in the bank, there are several ways to satisfy your debt to the Internal Revenue Service. If you’re in the unfortunate position of owing more than you can afford, the agency offers three options to deal with your tax liability.
Remember: Payments must be received by the IRS by the April 15 tax deadline, or April 17 for residents of Maine and Massachusetts due to local holidays. If your payment isn’t received, the IRS can charge penalties and interest.
If you filed for an extension, you still must pay any estimated taxes you owe by the April 15 deadline.
Here are your payment options:
❚ Direct from bank account: You can have funds automatically withdrawn from a bank account when you e-file and choose the e-pay option provided by tax preparation software or through a tax professional. Otherwise, you can pay online at the IRS through its “Direct Pay” service from your checking or savings account for no cost. You can track your payment through email notifications or the “Look Up a Payment” tool.
❚ By debit or credit card: You can pay online or by phone using one of three processors that work with the IRS: WorldPay US, Link2GovCorporation or Official Payments. These processors charge a service fee that may be tax-deductible.
❚ By cash: You can pay your tax liability at a participating retail store like 7Eleven. There’s a $3.99 fee per payment. In general, it takes five to seven business days to process your payment, so give yourself enough time before the April 15 deadline to get it done.
❚ By check, money order or cashier’s check: Make it payable to U.S. Treasury and include the following information on the check, money order or cashier’s check: your name and address, daytime phone number, Social Security number (or the first SSN to appear on a joint return) or employer identification number, tax year, and the related tax form or notice number. Don’t staple or paperclip your check to your voucher or tax return. Mail your payment to the address on the notice or instructions.
By wire transfer: Some banks can do a same-day wire for your tax payment. You need to complete the Same-Day Taxpayer Worksheet. Ask your bank or other financial institution for cut-off times, fees and other details.
Pay now the tax you owe
Can’t pay Uncle Sam now?
❚ Installment plan: The IRS offers two installment plans that you can apply for online: a short-term (less than 120 days) payment plan or a long-term (more than 120 days) one. Which plan you qualify for depends on how much you owe and your specific tax situation. Fees and interest will be added to your tax bill if you take a payment plan.
❚ Settle for smaller amount: The IRS also allows you to offer a compromise to settle your tax debt for less than the full amount. The agency considers your ability to pay, income, expenses and asset equity to determine if you qualify.
You must be current on your tax filings and not in an open bankruptcy proceeding.
❚ Delay payment: You can request a temporary delay in payment from the IRS. The agency may require you to fill out a Collection Information Statement form and provide information on your personal finances. You will be charged penalties and interest on your tax debt until you pay the entire amount.