Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.

Recs

1

Paying Taxes Electronically

If you're one of the unfortunate folks (or fortunate, to be more accurate, since you haven't let the IRS hold your money interest-free) who have a balance due on your federal tax return, you have a number of options with which to make your tax payment. 

There are actually two ways to pay your taxes electronically. They include authorizing a withdrawal from a checking or savings account (direct debit) or using a credit card. In fact, e-payments can be used for a number of different things for tax year 2000:

  • The balance due on your 2000 federal tax return
  • A projected balance of taxes due if you choose to pay with a request for an automatic extension of time to file your return
  • Estimated tax payments for tax year 2001

If you pay your extension payment or your 2001 estimated tax payment via e-payment, you won't even have to file the respective forms when you make your payment (Form 4868 for an extension, Form 1040ES for estimated tax payments). 

Additionally, there are many states that now accept e-payments for state tax balances due or estimated tax payments. So don't overlook your state payments if you decide to go the e-payment route. 

Direct debit
If you decide to pay your taxes by direct debit from a checking or savings account, you won't incur any fees. Not only that, you can designate a future date for the actual withdrawal to occur. But in order to use a direct debit, you must e-file, either by a computer or by phone. It's not available if you decide to file using a normal paper return. 

Since you can direct the time when you authorize the debit from your account, you can file early, but schedule the withdrawal as late as April 16. But for returns filed after April 16, the payment will be effective on the filing date. 

Credit cards
If you decide that the direct debit isn't your cup of tea, you can choose to make your payment by credit card.  Using a credit card is much more flexible, since a credit card can be used for payment even if you decide not to e-file. 

But be aware: There is a "convenience" fee for using your credit card, and this fee is set by the private sector processors and not the IRS. These fees can be pretty hefty, so make sure that you think twice before using your credit card for payment. Your tax payment and the convenience fee will be listed separately on your credit card statement. 

The IRS has authorized two companies to accept credit card payments from both e-filers and paper filers.  They are the Official Payments Corporation and Phone Charge, Inc. Each company has its own fee schedule, and each offers both phone and Internet payment services. You can use either of these services to charge taxes to your American Express Card, Discover Card, or MasterCard account (but not Visa). Again, there's no reason to not file early, and then wait until mid-April to make your credit card payment. So the credit card option is very handy for those folks who are still paper-filing. 

One last word about using credit cards to make your tax payment: You might think that if you have an affinity or mileage card, you'll earn credits for the payments that you make. And you may be right, but you also may be wrong. So check with your bank before you take the credit card payment plunge in order to determine if your payment will be treated as a purchase (subject to mileage or affinity points) or as a cash advance (not available for mileage or affinity points).


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1146144, ~/Articles/ArticleHandler.aspx, 4/25/2017 4:40:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
Change up DOW 20763.9 216.1 1.1%
Change up S&P 500 2374.2 25.5 1.1%
Change up NASD 5983.8 73.3 1.2%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes