Photo: Anna_Kim (Shutterstock)Tax weekTax weekWith the upcoming tax return, Two Cents is putting its green eyes on and focusing on stories that will help you manage tax preparation and get the most out of your returns.
If you are one of them 20% of Americans If you are expecting to owe the IRS money after filing taxes this year, you may be wondering how best to pay them off. It turns out there are several ways you can get your balance right with the IRS, and some options are better – and cheaper – than others
IRS direct broadcast options are always free
If you don’t want to pay for the privilege of sending the money to the government, the IRS offers its own electronic money transfer service, either through the Direct payment portalor through the IRS2Go mobile app. In both cases, payments can be made directly from your current or savings account. However, this service has limited scheduling options and you have to enter your personal information every time you use it, which is very painful. But it works well when you have to make a one-time payment.
Another option offered by the Ministry of Finance is the electronic federal payment system (EFTPS) Portal that offers more planning options than Direct Pay. More commonly used by business owners for regular, scheduled payments, this tool allows large payments up to $ 10 million.
None of the services charge a processing fee.
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Check or money order
You can send a check or money order to the US Treasury Department, but make sure the check is mailed Form 1040-V Include how much you owe and make sure you send it to the correct address as these vary by region. You will find the right address Hereand more information about using this payment method Here. This option is free for a regular check, but you will likely pay a small fee to get a money order.
Credit or debit card
The IRS works with third party companies that process payments using your credit or debit card (you can use either PayUSAtax, Pay1040 or ACI payments, the instructions for which are found Here). However, with this option, fees are inevitable. Debit card transactions cost you a few dollars per transaction, and credit cards can cost you even more because the fee is based on a percentage of your total payment:
- PayUSAtax: 1.96%,
- Pay1040: 1.99%
- ACI payments: 1.99%
If you use tax preparation software to file your taxes, you will also be charged if you pay with a credit card. These fees are higher – closer to 2.5%.
Even if you use a cheaper IRS partner like ACI Payments, you’ll pay almost $ 40 to process a $ 2,000 payment. Because of this, you should avoid using your credit card unless it is a necessity or you are using the transaction for Qualify for the welcome bonus or credit card reward points (This is only recommended if you can withdraw the card instantly.)
The IRS accepts payments with Direct debit from your checking account, but only if you have submitted your tax return electronically using tax preparation software. However, you need to be careful with this option because Tax software providers can surprise you with pinned fees. The IRS recommends that you check with your financial institution’s tax filing service to find out about any fees.
Same day transfer
A lesser-known payment method is to ask your bank to arrange a transfer to the IRS. However, it’s a bit of a painful one Fill out IRS form– In addition, fees can vary widely depending on the financial institution. However, there is no limit to wired transfers, making it an ideal option for processing large payments.
Pay in cash in person
If you would like to pay in person, you can pay in cash at a participating trading partner who is listed Here. The downside is that they’ll likely charge a few dollars as a fee and can only accept payments up to $ 1,000 per transaction.
You can also pay with yours local IRS officeHowever, with many locations closed due to the pandemic, make sure your local office is open and you make an appointment in advance.