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How to pay taxes if you owe

Posted on March 18, 2020

This year’s tax-filing deadline is Wednesday, April 15, which is also the due date for payment of taxes you may owe. That said, the IRS is downright flexible in the number of various options it offers for how to pay what you may owe.

If you end up owing taxes this year, here are your options, according to the CPAs at Teipen Selanders Poynter & Ayres:

  • Electronic Funds Withdrawal: Payment by EFW allows you to securely file and pay electronically from your bank account when using tax preparation software or a tax professional. EFW is free – but only available when electronically filing your return.
  • Direct Pay is free and allows you to pay federal taxes directly from a checking or savings account without any fees — or preregistration. After submitting a payment through Direct Pay, you will receive immediate confirmation. You can also schedule a pay date ahead of time.
  • IRS2Go is a free mobile app that offers you the option to make a payment with Direct Pay for free — or by debit, credit card or digital wallet through an approved payment processor for a fee. You can download IRS2Go free from Google Play, the Apple App Store or the Amazon App Store.
  • Credit, Debit Card or digital wallet allows you to pay online, by phone or with a mobile device through any authorized payment processors but isn’t free. (The IRS doesn’t receive any fees for these payments.) Go to gov/payments for authorized card processors and contact info.
  • Electronic Federal Tax Payment System is a free service providing you with a safe and convenient way to pay individual and business taxes by phone or online. To enroll and for more information, call 800-555-4477, or visit gov.
  • Cash is still accepted by the IRS. If you wish to pay taxes with cash, you can use the PayNearMe option. However, payments are limited to $1,000 per day, and a $3.99 fee applies to each payment. The IRS urges taxpayers choosing this option to start early because PayNearMe involves a four-step process. Initiating a payment well ahead of the tax deadline will help taxpayers avoid interest and penalty charges.

TSPA reminds you that all taxpayers must file their 2019 tax returns by April 15, 2020, or request a six-month extension; however, any taxes owed are still due on April 15.

If you can’t pay what you owe by April 15, you should still file an extension to avoid the higher penalties for not filing at all. Extensions can be requested using Free File, by filing Form 4868 and paying all or part of the income tax due. Your CPA can help you arrange the best option for your situation.

Not sure what you owe? You can always can go to IRS.gov/account to securely access information about your federal tax account. Here you can:

  • pay online or set up an online payment agreement
  • access present and previous tax records
  • review your payment history
  • view key tax return information for the current year as originally filed.

If you owe but cannot pay the balance in full, the IRS has options, but interest and penalties grow the longer the debt is owed. Often you qualify for one of several relief programs including a full-pay agreement, a short-term plan (up to 120 days to pay in full), or a long-term monthly payment plan (installment agreement). The amount owed and tax filing compliance determines which payment plan options may be available

Ask your CPA for eligibility details and help in setting up an IRS agreement or Offer in Compromise, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.

Sometimes situations come up that make paying taxes in full by deadline, especially difficult. Teipen Selanders Poynter & Ayres can help you get through the process in a dignified fashion, working out an arrangement that suits your needs.