How to pay taxes online in the USA

IRS provides plenty of ways to pay taxes online

 pay taxes online

How to pay taxes online in the USA. Source: shutterstock.com

Paying taxes is an integral part of being a citizen. Every society needs to support government workers, social services, law enforcement, healthcare, and education establishments, as well as maintain infrastructure and public safety measures. Therefore, the majority of the population pays taxes regularly. Thankfully, many countries have this process automated and digitized.

In the United States, an online taxation system is crucial since the authorities levy taxes on federal, state, and local levels. Most of the taxes fall into a few basic categories: taxes on income, taxes on property, and taxes on goods and services. It’s estimated that Americans spend over 29% of their income to pay taxes each year.

When it comes to paying the outstanding tax balance in the US, the Internal Revenue Service (IRS) also provides a few convenient online payment methods.

Bank account (Direct Pay)

Taxpayers can use this option to pay taxes for Form 1040 series, estimated taxes, retirement plans (5329), and other associated forms directly from their checking or savings accounts. Using this link, you should select the appropriate payment type and reason for your payment. After that, the service verifies your identity requesting information from your filing history. If verification is successful, you’ll be allowed to proceed to Direct Pay.

Direct Pay is available on:

  • Monday to Saturday: Midnight to 11:45 p.m. ET
  • Sunday: 7 a.m. to 11:45 p.m. ET

EFTPS: The Electronic Federal Tax Payment System

This option requires separate enrollment but it’s a great solution for businesses or large payments (over $10 million).  While enrolling in EFTPS, you will receive a personal identification number (PIN) via U.S. Mail in 5-7 business days. Later on, you’ll require your Employer Identification Number (EIN) or your Social Security Number (SSN), PIN, and Internet password for logging in and making payments by EFTPS.

pay taxes online

IRS provides plenty of ways to pay taxes online. Source: shutterstock.com

When the EFTPS website is unavailable due to technical reasons, you can always make a tax payment by calling the voice response system at 1.800.555.3453.

If you are required to make deposits electronically but do not wish to use the EFTPS service yourself, you may ask your financial institution about ACH Credit or same-day wire payments, or consult a tax professional or payroll provider about making payments for you. This may incur additional fees, though.

Payments using EFTPS or the voice response system must be scheduled by 8 p.m. ET the day before the due date to be received timely by the IRS. The funds will move out of your banking account on the date you select for settlement.

Debit/credit cards

You can apply debit card and credit card payments only to certain forms, payment types, and tax years. Moreover, the frequency of such payments is also limited. Use the table at the IRS website to find out which kinds of payments you can make using these methods, and how often you can make them.

You can pay by internet, phone, or mobile device whether you e-file, paper file or are responding to a bill or notice. However, employers’ federal tax deposits cannot be paid by card.

The fees for debit/credit card payments depend on the Payment Processor you choose. Generally speaking, you might pay up to 2% of the sum, but not less than $2.

When you pay while filing your taxes through online software, fees may get up to 4%. In this case, you’ll pay for additional convenience. You can find some examples of tax preparation software here.

International wire transfer

direct debits

Not all foreign banks may allow conducting wire transfers online. Source: shutterstock.com

International taxpayers who do not have a U.S. bank account may transfer funds from their foreign bank account directly to the IRS to pay off their individual or business tax liabilities.

This variant might be too expensive so you’d better consider all the available options before dealing with remittance. Here you may face both service fee and a conversion fee since payments of U.S. taxes must be remitted only in U.S. dollars.

Furthermore, not all foreign banks may allow conducting wire transfers online. In this scenario, you’ll need to visit a bricks-and-mortar branch.

In order to complete an international wire transfer through your foreign bank, you will need to complete the Same-Day Taxpayer Payment Worksheet with the proper Tax Type Code and tax period (year and/or quarter) so that the funds will be properly applied to your IRS tax liability.

Other information required includes

  • IRS account number – 20092900IRS (optional)
  • IRS account RTN/ABA Number – 091036164 US TREAS SINGLE TX

Mobile app

IRS2Go is the official mobile app of the IRS available at Google Play, App Store, and Amazon. The app is localized in English and Spanish.

The in-app payment methods don’t differ from the usual ones. Yet, you may avail them on the go, which is a great benefit.

Besides making payments, IRS2GO allows you to check your refund status, find free tax preparation assistance, sign up for helpful tax tips, and stay connected to the IRS through various social media streams.

Payment plan

You can apply for a payment plan online. Source: shutterstock.com

If your tax balance is too high at the moment, you can apply for a payment plan online. This will enable you to pay off the debt over a longer period of time.

Once you complete your online application you will receive an immediate notification of whether your payment plan has been approved.

Individuals may qualify to apply online for:

  • Long-term payment plan (installment agreement) that allows paying over 120 days or more, if you owe $50,000 or less in combined tax, penalties and interest, and filed all required returns.
  • Short-term payment plan to pay off the sum in less than 120 days, if you owe less than $100,000 in combined tax, penalties and interest.

Businesses may qualify to apply for the long-term payment plan (installment agreement) online, if they have filed all required returns and owe $25,000 or less in combined tax, penalties, and interest.

If you are a sole proprietor or independent contractor, you should apply for a payment plan as an individual.

More details on the fees and requirements for such applications can be found on the IRS website.

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