IRS Direct Pay one of many ways to pay estimated taxes
Wednesday, September 10, 2014
Last week I signed onto the Electronic Federal Tax Payment System, known in acronym-speak as EFTPS (eff-tips), and authorized our third quarter estimated tax payment to be made by our bank on Sept. 15.
Click image to download full 1040-ES package.
I've used EFTPS for eight years and although there were some early bumps, I'm pretty happy with the system.
A lot of folks, though, are put off by EFTPS. One of the biggest complaints is that it takes some time for the account to be operational. The IRS has speeded up the process, but if you are thinking today about opening and using EFTPS to pay your 1040-ES that's due next week, too bad.
You can go to the EFTPS website and get started, but it will take about a week before you can use it. You can't access your account until you get a PIN, which is mailed to you in five to seven days.
There's no such hurdle, however, if you want to directly pay your estimated tax bill -- and other Internal Revenue Service obligations -- via the agency's new Direct Pay option.
The Direct Pay difference: Like EFTPS, Direct Pay is a free online payment system.
Click image for FAQs on IRS Direct Pay.
And also like EFTPS, Direct Pay will take money from your designated checking or savings account to cover your tax bill.
But unlike EFTPS, Direct Pay is available without having to pre-register.
The Direct Pay differences are appealing enough that since its launch earlier this year, the e-payment system has processed more than one million payments from individual taxpayers totaling more than $1.7 billion.
It's a good choice if you want to e-pay your third quarter estimated tax payment that's due this coming Monday.
It's also is an option if you, like the hubby and me, got a 2013 tax return filing extension until Oct. 15 and in filling out those forms discover that you owe additional tax. I'm hoping when I finish up our 1040 this weekend that doesn't happen to us!
Paying directly: To use Direct Pay, you'll need to provide your tax information, verify your identity, enter your payment information, provide an electronic signature, and review and record your online confirmation.
That confirmation is immediate. As for other time-sensitive issues, Direct Pay is available 24 hours a day, seven days a week, and you can schedule payments 30 days in advance.
For folks who are uneasy about Uncle Sam having your bank account data, the IRS says it does not keep the Direct Pay financial information in its systems after the cash is transferred.
Other tax payment options: If neither EFTPS nor Direct Pay appeals to you, the IRS offers other payment options for your impending estimated and other tax payments throughout the year.
You can pay using your credit or debit card through a payment processing company.
Note that this will cost you more than just what you owe in taxes. Depending on which piece of plastic and which IRS-approved payment company you use, it could be a flat fee of a few dollars or a percentage of your tax bill.
Or you can go old-school and pay your tax bill with a check or money order.
If you use the U.S. Postal Service or an approved private delivery service, you can wait until Monday to mail your payment. The IRS considers a payment made or return timely filed if it's postmarked or otherwise officially dated by the delivery company on the due date of the tax.
You also might be able to drop off your check or money order at your local IRS office. Just check with the nearest Taxpayer Assistance Center to make sure it accepts such payments before you head out to the office.
Now that you know how to get your estimated tax payment to the IRS, all you have to do is figure out just how much you've got to send!
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