Do you plan to owe Uncle Sam for the 2022 tax year? How do you plan on paying? By check? If so, you may want to reconsider your options for this year.
Before COVID-19, it was very typical for taxpayers to have their Federal (and State) refunds direct deposited into their bank account and pay taxes owed by mailing a check with the accompanied coupon. Unfortunately, the impact of COVID-19 still lingers into the 2023 year with staffing shortages. Whatever the individual reason may be, it is now not unusual for checks to take longer than expected to be received and processed by the Federal (or state) agency. In some cases, it still takes 2-3 weeks. Therefore, you may want to consider other options, including various electronic forms, of paying your Federal income taxes.
Mail a Check, Money Order or Cashier’s Check
As mentioned earlier, this method of making a payment is very common. These methods are easily tracked, allowing the taxpayer to verify when the check is received and cashed. However, this method does require mailing the check along with the voucher, which could cause a delay in being processed. In addition, money orders typically have a limit of $1,000 and a bank may charge a fee to issue a cashier’s check or a money order.
For more information on how to submit a payment via check, money order or cashier’s check, follow the link: https://www.irs.gov/payments/pay-by-check-or-money-order
Federal Fund Wire Transfer
The IRS does accept same-day federal fund wire tax payments. However, a taxpayer will want to contact their financial institution to see if they can process the transfer, what fees they charge, and what the deadlines are for a transfer. For this option, they will need to complete the Same-Day Taxpayer Worksheet found on the IRS website. Follow the link for more information: https://www.irs.gov/payments/same-day-wire-federal-tax-payments.
Pay in Person at your Local IRS Office
There has been increased concerns with the increase in fraudulent activity. As a result, paying directly at a local IRS office might be a safe and secure option. For this option, the taxpayer will need to make an appointment with their local IRS Office. This requires them to plan accordingly when scheduling an appointment to avoid missing the deadline to make their payment. Follow the link to locate your local office and schedule an appointment. https://www.irs.gov/help/contact-my-local-office-in-new-york
Electronic Funds Withdrawal when e-Filing, select this option on your tax return
This is a very convenient, safe and secure option for those that plan to e-file their tax return using a tax preparation software or hired tax professional. Opting to have electronic funds withdrawn from the bank account allows the taxpayer to e-file and e-pay in one-step. The option allows some control over scheduling the payment, either at the time of e-file or other scheduled day before the due date. Also, a taxpayer can cancel the scheduled payment up to 8:00 pm Eastern Time two business days before the scheduled payment date). The IRS does not charge a fee for this transaction, although a taxpayer will want to consult their financial institution before proceeding with the payment.
Pay Online-IRS Direct Pay, Debit Card, Credit Card, or Digital Wallet
The IRS now has more flexibility when making payments online. Taxpayers can make payments directly on the IRS website at https://www.irs.gov/payments. There, the taxpayer can opt to pay from their bank account (ACH payment), debit card, credit card, or digital wallet. Many of these processors accept a number of different payments such as Visa, Master Card and even PayPal! From here, the taxpayer can track their payment and ensure payment is processed.
For those that like to plan ahead, the IRS Direct pay allows taxpayers to be more selective on when the payment is made. Taxpayers can schedule payments, make same-day payments (a saving grace for us procrastinators) and change/cancel scheduled payments up till two days before the payment date. However credit card transactions cannot generally be canceled. As proof of payment, the taxpayer will receive a confirmation number and a receipt taking two business days to process.
When making a non-ACH payment, the transaction may be subject to additional fees. The IRS uses outside services to process these payments each with their own separate set of fees. Follow the link for information on these different processors and their fee schedule https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card.
Pay Using the IRS’s Official Mobile App-IRS2Go
This payment option is the mobile version of the IRS Direct Pay. Once downloaded, the taxpayer can make an ACH or non-ACH payment similar to the IRS Direct Pay-subject to the processor fees. For more information on IRS2Go and to download the app, follow the link https://www.irs.gov/newsroom/irs2goapp.
Pay Online-The Electronic Federal Tax Payment System
This is a great option for those that want the convenience of having control over their payments like the IRS Direct pay but want the added security. Taxpayers will have the ability to make payments online or over the phone, schedule payments and make same-day payments. These schedule payments can also be changed or canceled until two days before the scheduled payment date. To opt into this option, follow the IRS EFTPS website at: https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system.
Unfortunately, with the added security features the process to set up an account takes some time. Once the account is set up through the IRS EFTPS website, it takes about a week (under normal postal mail operating times) to receive the PIN needed to schedule transactions. Actual postal mailing time might take longer. Therefore, taxpayers interested in making an IRS EFTPS payment will want to plan in advanced. In addition, individuals may incur a fee through their bank if they initiate the payment instead of them scheduling the payment online or over the phone.
The IRS strongly advises taxpayers to avoid making tax payments in cash because of the concern of tracking the payment made if there is a discrepancy in the future. The IRS especially strongly advises against mailing in cash. Follow these links for more information.
Paying Your Taxes With Cash: https://www.irs.gov/payments/pay-your-taxes-with-cash
What to Expect When You Pay Cash at an IRS Office:
Timing and precision is everything when making sure your payment is received and processed in time by the IRS’s deadline. If you have any questions about which method you should use, please contact your tax professional or financial advisor.