The IRS updated its website a few years ago, and now it’s easier than ever to pay taxes online. Using the IRS online tax portal is convenient and straightforward, but it’s essential to use these resources correctly. It only takes a few minutes to pay taxes online through IRS.gov, but you still need to take the process seriously. Discrepancies on your tax forms could result in costly fines and penalties, and you’re responsible for reporting the correct information.
Paying Your IRS Taxes Online
Whether you’re calculating your income throughout the year to pay estimated tax before the quarterly deadlines or looking to pay your taxes once your tax return has been successfully filed, you can also pay online, using one of the methods below.
How to Use IRS Direct Pay
Using the IRS Direct Pay system gives you a secure and free way to pay your owed taxes. You can either pay directly using your checking or savings account or schedule an advance payment process.
You can also pay with a debit or credit card, but the IRS uses a third-party to processes card payments. As a result, you will have to pay a small transaction fee to use this method. If possible, you should /use the IRS Direct Pay system to avoid fees.
IRS2Go or E-filing
The IRS2Go app allows you to submit online payments through direct transfer or debit/credit card. You can download the app for free from the Apple App Store, Google Play, or Amazon. You can also use the app to track your tax return and tax refund status.
If you are filing your federal tax return electronically, you may choose to file for a scheduled payment with your return. By using the Electronic Funds Withdrawal system, you can pay what you owe directly from your bank account. If you file with a tax professional such as our firm, we’ll ask you your preferred method and if you want to pay your taxes with the filing of your return.
With this method, you have the ability to choose the amount you will be paying and the date you will be doing so, as long as it’s on time. For certain software, you may or may not have to pay a processing fee, and you may also have the choice to pay using a debit or credit card.
Other Options
You have a couple of other options, as well. You can use the Electronic Federal Tax Payment System (EFTPS) for paying your taxes online. Once you’re registered, you are also able to pay by phone by calling 888-555-4477.
You can also pay your taxes with a check or money order. Make checks and money orders payable to the U.S. Treasury. Also, include your name, address, contact number, and your Social Security or Employer Identification Number with your payment. Always remember to include the tax year and appropriate form numbers.
Installment Payments
If you are unable to pay right away, you have the option to apply for a personal online payment agreement. The installment agreement is set up through direct debit using a direct debit plan to ensure that you don’t have to write and mail a check each month.
Finally, if you are unable to pay because you owe more than you are able to afford, you can try your luck with the Offer in Compromise system. Be aware, however, that not everyone is eligible, so you will have to see if you qualify using the Offer in Compromise Pre-Qualifier.
You can also pay your estimated taxes online. We have a blog post that’s dedicated entirely to paying estimated taxes online or by mail. Click the link to read it now.
Penalties for Late or Unpaid Taxes
The IRS wants its money, and you can get in big trouble for making them wait. If there’s a problem with your tax payments, you’re subject to penalties and fines. Here are a few examples of mistakes that can result in costly penalties.
Failure to File
The IRS will penalize you if you don’t file your tax on time.
Missed Payments
You have to pay your taxes when they’re due. You risk fines and penalties if you don’t pay on time.
Failure to Pay Proper Estimated Tax
Your estimated tax payments have to cover at least 90% of your total tax liability. Otherwise, the IRS will assess penalties when you file your annual tax return.
Dishonored Check
If you write a check that bounces, the IRS will penalize you. Always make sure you have enough money in your checking account to cover your tax payment.
Common Tax Mistakes and Penalties
For a complete list of all the calculated penalties and more information on IRS penalties, you can visit the IRS Common Penalties page.
Downloading Your IRS Transcripts
IRS transcripts show all the information the IRS has on file for you’re account. Use these reports to ensure your tax info lines up with the government’s records. Click the link to see our complete guide to IRS tax transcripts.
Get Help With Your Tax Payments
Personally managing your taxes is a major hassle for many small business owners. It’s hard to keep track of all the deadlines and other compliance issues while you’re running a business full-time. Growing businesses often find that they need the services of a professional tax advisor. Oftentimes, professional help pays for itself by helping you find deductions and tax breaks that can result in major tax savings.
The tax professionals at Shared Economy Tax have helping busy business owners like you manage your taxes for years. We specialize in serving small business owners and self-employed workers, so we understand the unique challenges you’re facing. Most other forms can’t match the level of service and Sharing Economy expertise that we can provide, so you should talk with us if you’re in the market for a tax advisor. Get started today with a free one-on-one strategy session with one of our tax pros today. You can also sign up for our newsletter using the form below for more free tax tips.