For employees, taxes are usually withheld by your employer on a monthly basis. You may however, need to pay any balance due after preparing your tax returns. People in self-employment will need to calculate quarterly installment taxes as the year goes by and finally settle any outstanding taxes for a given year by the 15th of April the following year. There are various options available to enable you to make these tax payments to the IRS. Below are six of these options:
1. Payment by Check or Money Order
One of the ways that you can settle your outstanding tax bill is by writing out a check to the IRS and having it posted to the IRS office. You can attach the check to your tax returns. Ensure that the amount on the check is the same as that of the outstanding taxes as indicated in the return to enable easier verification. You can also send a check or money order at any other time within the year to settle outstanding taxes. You will need to indicate your name – or names for those who file jointly – your Social Security number (for joint-filers, indicate both the numbers included in your tax returns), physical address, telephone number, and the tax year that the check is settling taxes for. You can get the address of where to send the check from the IRS website. You can also drop the check at the nearest IRS office in person.
2. Electronic Funds Transfer
Another option available to settle your due taxes is by an electronic funds transfer. The IRS provides a system to facilitate this process, referred to as the Electronic Federal Tax Payment System (EFTPS). You can pay taxes or schedule payments through this system. You can access the system from the website at eftps.gov or by calling the toll free IRS number at 800-555-4477.
3. Installment Payment Options for Taxes below $25,000.00
If you owe taxes of less than $25,000.00, you can set up an installment payment plan through the IRS website. This online service is referred to as the Online Payment Agreement (OPA). The service will enable you to pay off the due taxes in monthly installments as opposed to making a lump-sum payment. You will however, be charged interests and late payment fees. You can also set up the installment payment plan by filing IRS Form 9465, “Installment Agreement Request Form”. The IRS will get back to you in response to the filed form and will give you the details of the installment payment plan.
4. Installment Payment Options for Taxes above $25,000.00
If the taxes owed are more than $25,000.00, you will need to file Form 433F, “Collection Information Statement” to be considered for a installment payment plan. The form requires you to provide details of your financial assets and other finance related information. You will also need to attach various support documentations for your finances. The IRS then reviews your specific financial situation and determines the amount of installments to be paid on a monthly basis.
5. Credit Card Payments
Another option available to settle your tax bill is by using your credit card. The IRS has outsourced the credit card payment service to three private companies and you can choose to pay from these various vendors. These three companies are Link2Gov, RBS WorldPay Inc., and Official Payments Corporation. You can make payments either by calling their telephone number or through their website. Note that these companies charge you for this service.
6. Short-Term Delayed Payment
If you do not have money by the time the taxes are due, you can call the IRS’s toll free number and request for some extra time to raise the funds. Usually, the IRS agents may give you up to 120 days to settle the taxes with no interest or penalties. You will however, need a good, justifiable reason or explanation to qualify for this grace-period extension.