You can pay your tax bill online with a debit or credit card.
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Now that Tax Day is (mostly) behind us, some taxpayers may be looking at the next step with a bit of dread: paying your tax bill. After you file, there are payment options available, including options if you can’t pay at all.
Here’s what you need to know.
If You Can Afford To Pay Your Taxes Now…
Pay by check or money order.
The reports of the death of payment by check are greatly exaggerated. Last year, President Trump signed Executive Order 14247, which requires federal agencies, including the IRS, to stop issuing paper checks by September 30 in favor of direct deposit, prepaid cards, and other digital payment options. Eventually, incoming payments, including tax liabilities and fees, will also be phased out in favor of electronic methods. But for now, checks will still be accepted.
To pay by check or money order, make it payable to U.S. Treasury. Make sure that it includes the following information: your name and address, your daytime phone number, the tax year the payment is for, the related tax form (for a regular tax payment, that’s Form 1040), and your Social Security number, employer identification number, or individual taxpayer identification number on the memo line. To make sure that your payment is credited properly, mail your check together with Form 1040-V, Payment Voucher. And, while you can use a private delivery service, the IRS encourages you to use regular mail.
And you’ll want to plan carefully if you owe big: the IRS won’t accept single checks or money orders of $100 million or more.
Pay by cash.
If you prefer to pay in cash, the IRS has partnered with VanillaDirect at participating retail stores like Dollar General, Family Dollar, CVS Pharmacy, Walgreens, 7-Eleven and Walmart (fees apply). You can find a map of participating locations here.
You can pay up to $500 per payment, and there’s no daily limit on the number of payments. Some other limits may apply.
Pay directly from your bank.
Direct Pay is a free IRS service that lets you make tax payments online directly from your bank account to the IRS. It’s free, and no sign-in is required. The best part? You can schedule your payment in advance (you can also change or cancel it within two days of the scheduled payment). To pay, choose the “Make a Payment” option on the main Direct Pay page. You’ll then select the reason for your payment (such as balance due), and the tax year to which it should be applied.
There are some limits to note. Direct Pay is only available Monday to Saturday, 12:00 a.m. to 11:45 p.m. ET and Sunday, 7 a.m. to 11:45 p.m. ET. You can’t make more than five payments in 24 hours, and no payment can exceed $10 million.
Pay from your IRS online account.
I’m a big fan of taxpayers accessing their online accounts at irs.gov—and being able to pay through the platform is one more reason. You can make a same-day payment or schedule payments up to 365 days in advance from your bank account (you can cancel payments before the scheduled date). You can also view pending and scheduled payments and check your balance. To make a payment, go to the IRS website and log into your account or create an account.
Pay by wire.
You may be able to do a same-day wire from your financial institution—contact your financial institution for availability, fees, and cut-off times. To make a payment, download the same-day taxpayer worksheet, complete it, and take it to your financial institution. If you are paying for more than one tax form or tax period, complete a separate worksheet for each payment.
Pay by debit card or digital wallet.
You can pay online or over the phone via an IRS-approved third-party payment processor (contact the payment processor directly for phone payments), and you can also pay with digital wallets such as PayPal and Venmo. The IRS doesn’t charge a fee for this service, but the platforms may. Your card statement will list your payment as “United States Treasury Tax Payment” and your fee as “Tax Payment Convenience Fee” or something similar. For card payments of $100,000 or more, special requirements may apply.
Pay by credit card.
I’m generally not a fan of replacing one kind of debt with another. But if your ability to pay is a timing issue—as opposed to an “I absolutely don’t have it at all” issue—you can pay your federal income taxes by credit card.
The IRS accepts all major credit cards (American Express, Discover, MasterCard, or Visa). To make a payment, go to the credit card payment page on the IRS website and choose a payment processor to pay online or by phone. As with debit cards, the IRS doesn’t charge a fee for credit card payments, but payment processors will charge a fee that can vary by provider, card type, and payment amount. Pay as much as you can upfront, since you’re limited to two credit card payments per year for payments on a Form 1040. (The rules are different for other forms, like Form 1040-ES.) Credit card interest and other fees can add up, so if you know you won’t be able to pay off the balance, consider other options.
Pay electronically using a prepaid card or mobile app.
If you don’t have a credit card, you can buy a prepaid credit card and pay online or through the IRS2Go mobile app.
Pay through the Electronic Federal Tax Payment System (EFTPS).
This is an old-school option if you have an existing EFTPS account. Individual taxpayers can no longer create new EFTPS accounts—consider another option like paying through your Online Account.
If You Need More Time To Pay Your Taxes…
Consider entering into an installment agreement with the IRS.
An installment agreement lets you pay what you owe over time. Depending on how much you owe, you may not need to speak with a real person—if you owe $50,000 or less in combined individual income tax, penalties, and interest, you can apply for an installment agreement online. You can also apply by mail using Form 9465. Fees apply. It’s cheaper to sign up online, and even less expensive if you agree to pay by direct debit.
You must file all of your tax returns before you apply. The IRS will usually let you know within 30 days of receiving your request whether it’s approved or denied. The IRS will charge you interest while you’re paying your bill and may file a federal tax lien until you pay in full. The IRS may also seize your tax refund while you’re in repayment (though you probably knew that could happen).
If you owe more than $50,000 or your taxes are not individual income taxes, the rules are a bit different. Check with the IRS directly in that event.
Consider an Offer in Compromise (OIC).
An OIC allows you to settle your tax debt for less than the full amount you owe. The IRS considers a host of factors, including your ability to pay and your income, expenses, and net equity.
Generally, the IRS will agree to an OIC only if it determines it cannot collect the total amount due within a reasonable period. This option shouldn’t be your first choice, and please don’t believe those TV commercials that claim you can settle your tax bill for pennies on the dollar. Do your homework before signing up with any company that promises you the moon in exchange for your payment. Many taxpayers have legitimate reasons they can’t pay their full tax bills, but the IRS looks for a really good reason before it cuts you a break—the vast majority of offers are rejected.
To apply, you must be current on all filing and payment requirements. The IRS will return any newly filed OIC application if you haven’t filed your tax returns.
There’s a non-refundable application fee, and you’ll need to be prepared to submit a lump-sum payment of 20% of your tax due or the equivalent of a monthly payment in advance. Penalties and interest will continue to accrue during the OIC consideration period.
While you can apply for an OIC on your own, I highly recommend consulting a tax professional. If you opt to handle it yourself, use the IRS’s Pre-Qualifier online tool to determine your eligibility and calculate a preliminary offer amount.
Ask for additional time.
Based on your circumstances, you may be granted a short reprieve to pay your tax in full, meaning that the IRS will stop its collections activity. You can request this by calling 1.800.829.1040. Penalties and interest continue to accrue until your balance is paid in full.
Can’t pay at all?
If you are insolvent or unable to pay due to circumstances beyond your control (for example, unemployment or disability), the IRS is willing to work with you. Give them a call at 1.800.829.1040 or use the phone number on any notice you may have received in the mail.
More Help Is Available If You Can’t Pay Your Taxes
If you’re not sure which option is best for you, the IRS has introduced a new online tool to help you sort it out. The Tax Debt Help tool provides help exploring tax payment options and identifying next steps, based on your situation.
The IRS Tax Debt Tool can be found at irs.gov—and it’s easy to use.
Kelly Phillips Erb
The tool guides you through a series of simple questions about your financial situation and tax debt. These include “Are you in bankruptcy?” and “Have you filed all your required tax returns?” You’ll also be asked what type of tax debt you have (individual versus business) and how much you owe. Finally, the tool asks whether you can pay now, over time, or not at all, and whether you have any extenuating circumstances that affect your ability to pay.
The IRS Tax Debt Tool guides you through a series of questions to give you recommendations about your payment options.
Kelly Phillips Erb
Based on your responses, the tool will guide you to potential payment and resolution options available through the IRS. These options may include payment plans, temporary delays in collections, or an offer in compromise for those who qualify.
While an online tool can’t account for every nuance, it’s a pretty good start if you’re just looking at your options. It’s free and easy to use. Importantly, to protect taxpayer privacy, the tool does not require you to enter personally identifiable information such as your Social Security number, name, or address. If you’re really stuck, don’t rely on online-only options to help you sort out paying your taxes. Instead, consult with a reputable tax professional.
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