It's EFTPS time
Sunday, March 27, 2011
If you'll owe the IRS this filing season and would like to pay your tax bill electronically, consider EFTPS.
The IRS and users of this electronic payment program pronounce the acronym "Eff-Tips." The official long name is Electronic Federal Tax Payment System.
Whatever you call it, and I personally have had some less than polite names (also starting with "eff") for it in the past, if you plan to use EFTPS and haven't yet set up an account, you need to get to it soon.
Yes, EFTPS is electronic. It's available by phone or online 24 hours a day, seven days a week. And you can schedule a business payment up to 120 days in advance or an individual payment up to 365 days in advance.
And yes, you sign up for EFTPS online. You'll need your:
- Taxpayer identification number; that's your Employer Identification Number (EIN) if you're enrolling as a business or your Social Security number if you're enrolling as an individual.
- Banking account number and routing number.
- Address and name as they appear on your IRS tax documents.
But to access EFTPS for actual payment of taxes, you'll need a password.
And the IRS sends you that password by snail mail. That takes a about a week, or as the IRS notes, seven business days.
So you need to register soon in order to use EFTPS by the impending April 18 filing deadline for your 2010 tax return payment.
Other EFTPS uses: Even if you don't owe the IRS this filing season, EFTPS can be handy.
The system is an easy way to pay estimated taxes, the first such payment for 2011 also due on April 18.
You can set up all four of your 1040-ES payments in one session and then not worry about them the rest of the year or into 2012, when the final 2011 estimated payment is due.
And the service is free. Unlike credit or debit card tax payments, there's no percentage of tax due or flat fee for a payment.
Of course, you do have to make sure you have money in your bank account to pay your annual tax bill or your multiple estimated tax payments any time a deadline is due. Just like any creditor, the IRS does not like to get insufficient funds notices.
And when you miss a payment, it could mean added costs in the form of penalties and interest.
But EFTPS, once you get the hang of it -- and trust me, even though it's not difficult, you do have to pay attention to the instructions -- you'll wonder how you ever paid taxes without it.
- Time to open your EFTPS account
- Time to sign up for EFTPS
- EFTPS 'R' Us
- ES time means EFTPS enrollment time
- EFTPS = $#*%&!
- IRS not cashing checks fast enough
- Electronic tax payment enrollment alert
- Figuring your estimated tax payment amount
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