When it comes time to pay the piper, taxpayers have several methods to choose from. You can dust off that checkbook and write a good old fashioned paper check, pay online with a credit or debit card (gotta love those rewards points), or pay via the Electronic Federal Tax Payment System (EFTPS).
First off, the trusty paper check. These days it seems this tax payment method is most commonly used by the grocery store patron purchasing one small item, invariably in front of me in the checkout line. However, personal checks are also a very common method for individuals to pay their taxes. When writing a check to the IRS, be sure to include your social security number, tax form (1040 for individual tax returns) and tax year on the memo line of the check. Also be sure to make a copy of the check for your records, and always send via certified mail to the IRS.
How about making tax payments with a credit or debit card? The IRS does accept tax payments via credit and debit cards, but not without a fee. Debit card payments are subject to a relatively modest flat fee of $3.95. Credit card payments are significantly more expensive, however. Typically, a fee of around 3% of the tax payment will be added to credit card transactions, which more than likely will eat up any rewards that may have been earned on the charge. For this reason, I recommend steering clear of credit card payments for taxes.
Finally, we arrive at the Electronic Federal Tax Payment System. EFTPS was introduced in 1996 as a method for making secure bank transfer payments to the IRS. In order to use EFTPS, taxpayers must first complete a simple registration process. Following registration, taxpayers will receive their EFTPS PIN via mail within seven business days. Be sure to hang onto this PIN, as you will need it in order to make payments. Once you have your PIN, you can make tax payments anytime via the EFTPS website. Payments can be scheduled up to a year in advance and must be scheduled at least 24 hours before the due date in order for the payment to be considered timely. Overall, EFTPS will be the best option for most taxpayers because it’s free, secure, and guarantees that your payment is received on time.
For more information on EFTPS, or to register, please visit www.eftps.gov.
By Austin Bradley, CPA