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IRS Tax Payment: Which Option Do You Prefer

2021-11-29 13:57:19 • Filed to: PDF Form Solutions • Proven solutions

In order to avoid finding yourself on the wrong side of the law and to avoid penalties and interest, it is important to pay what you owe to the government by the due date following the right procedures. The Internal Revenue Service provides several tax payment options for tax payers. Some may be convenient while others may not. However, it is important to know and understand what options you have as a tax payer in order to pay your IRS tax payment as at when due. This article is going to look at several IRS tax payment options while offering some tips on choosing them.

Tax Payment IRS Offers

There are several options available for taxpayers to pay their taxes. Some can be used for outright payment while some can be used when you do not have enough money to fully pay your tax obligations by the due date.

irs tax payment

Direct Debit Payment Option : One of the easiest ways of making your federal tax payment is by using the "Direct Pay" on the IRS.gov website. With this option, you are allowed to pay your taxes directly from your savings or checking account.

However, it is important to note that you will need to provide your social security number or your individual tax identification number in order to use the system. The website will ask you the reason for your payment and it is important to select "Tax Return" so that your payment will be applied from the amount owed from your tax return.

federal tax payment

Check or Money Order Payment Option : This option is useful for people who are filing a paper return. Using this option, you are expected to use the payment Voucher IRS Form 1040-V to submit your payment. You can then mail the form and the tax return in the same envelope to the IRS. To learn the mailing address, read more here.

tax payment options

Credit Card Payment Option: There are some times when you may not have enough fund in the bank but do have some credit in your card, and then you can use the credit card to pay your taxes. All that is required is to go to the IRS website and select a payment processor.

However, note that there is a processing fee in using your credit card for IRS tax payment but it is better than the penalties for paying late.

irs tax payment

Installment Payment Plan Option: This option is mostly ideal when your tax bill is too high for a credit card. Then at this point, the IRS will accept a monthly payment from you. In fact, you have an option of picking the monthly payment amount and the date it will be due.

Note that the IRS can grant you an installment payment option request irrespective of having enough money on hand to pay once if you have previously filed and paid your taxes on time and your tax amount is $10,000 or even less. Also note that tax payers in bad financial state can use the installment payment option to make partial payment of their taxes. To set up Installment Payment Plan, taxpayer needs to complete the Form 9465 .

federal tax payment

Offer to Settle Option: This is a good option is paying your taxes will cause you extraordinary hardship. In this case, you can use the "Offer in Compromise" which is a settlement offer to the IRS. The whole thing is about offering to pay a part of your taxes immediately while the IRS drops the rest.

However, you need to qualify for this by filling a lot of paper work and demonstrating that it is impossible to pay all the taxes you owe. But note that if it is possible for you to pay your taxes through an installment plan, then your offer in "compromise" will not be approved.


Tips for Choosing the Most Suitable Tax Payment Options

  • It is important to understand that whether you e-file your tax return or you file a paper return, you can always pay by phone or online with a debit or credit card. And equally note that the service provider will charge a processing fee.
  • Ensure that you can accurately send your payment voucher and tax return to the IRS if you choose the payment by check option. This means that you must get the IRS mailing address correctly, else your tax return file and voucher will not get to the IRS when due and it becomes a problem. Also remember not to staple your payment with the tax form.
  • Make sure you are eligible before submitting your offer for the "Offer in Compromise" to the IRS. Go through the IRS website and understand the process before you proceed. Note that the “Offer in Compromise” can be rejected by the IRS if you are not eligible.
  • The Direct pay option is safe and easy to use and can be done in few simple steps in one online session when you click on the payment tab on the IRS website.

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Margarete Cotty

chief Editor

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