If you don’t know your options, paying your outstanding taxes to the IRS can sometimes prove to be a time-consuming effort. However, when it comes to U.S. federal taxes, the U.S. Internal Revenue Service (IRS) offers various ways by which a U.S. taxpayer can clear their tax dues.

Here is a brief summary prepared by AG Tax analysts on the ways by which a taxpayer can pay his/her tax dues.

Direct Pay via Savings/Checking Account or Debit Card/Credit Card Payment

Through ‘Direct Pay’, the taxpayer can make their tax payment through their checking or savings account directly to the IRS and receive an instant confirmation of their payment. This option can be used while e-filing one’s tax return. Also, by using Electronic Funds Withdrawal, the taxpayer can provide a date and amount of the payment.

Taxpayers can also choose to pay their taxes with their debit or credit card. This payment is carried out with the help of a payment processor who will charge a payment processing fee. One can use their credit or debit card to pay online or on their mobile devices.

With the help of the latest IRS application: IRS2Go, taxpayers can manage their tax accounts, and use this application free of cost to make their tax payments at their convenience.  IRS2Go is iOS and android compatible, and can be downloaded from Google Play, the Apple App Store, or Amazon.

One can also call the IRS number 888-555-4477 or visit EFTPS.gov and pay their taxes through the step by step commands provided electronically over the phone.

However, if one does not have access to online payment systems, the taxpayer can always rely on the basic methods of tax payment through check or money order. Make the check, money order or cashier’s check payable to the U.S. Treasury. Do not staple, clip or attach your payment to the tax form. Include your name, address, daytime phone number and Social Security number, ITIN or Employer Identification Number on the front of the payment. Use the SSN shown first if it is a joint return. Also include the tax year and related tax form or notice number. Do not send cash through the mail.

Alternate Methods of Tax Payment

There are various methods to pay one’s taxes if the taxpayer has the available funds to make these tax payments; but what if the taxpayer is short of money to pay their taxes in full? Fortunately the IRS has a few instalment payment options for taxpayers who cannot pay their tax due(s) in one go. Some of these methods are:

Instalment Payment: The taxpayer can go to the IRS website, apply for an online payment agreement and set up a direct debit instalment agreement. By setting up a direct debit payment, a particular amount will be deducted from the taxpayer’s account and directed towards the tax due for a set of months until the tax liability is paid off.

Offer-in-Compromise: An offer in compromise is available for those taxpayers who owe more taxes than they can pay. Under this payment method, the IRS partially reduces the taxpayer’s tax liability. However, do note that not every taxpayer will qualify for the offer-in-compromise tax payment facility. Usually taxpayers with a good tax reputation facing economic hardships qualify for the offer-in-compromise. To know one’s eligibility, a taxpayer can use the ‘Offer in Compromise Pre-Qualifier’ available on the IRS website. (For more details read: IRS Payment Plans)

That being said, the deadline for IRS tax payment is April 15 of every year, so make sure to to take action to pay your amount owing to avoid any additional interest and penalties. You can get an automatic extension of time to file when you make an electronic payment by April 15.

AG Tax LLP Can Help

If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.

Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canada and other international tax laws.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • U.S. Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  • 416-238-5920 (Greater Toronto Area, ON)
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  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.