Five Simple Ways To Send IRS Your Tax Bill And Their Pros And Cons

When are 2019 taxes due? This is a common question among U.S. citizens now that the 2020 tax season is here with us. The deadline for filing returns for U.S. residents is April 15th. In case you end up owing tax returns, you should clear your tax bill by the same date; otherwise, the IRS will penalize you. Here are the payment options and how they work and some advantages and disadvantages of every method

1. IRS direct pay

You can use the IRS Direct Pay service on their website to set up a direct Fund transfer from your savings or checking account. You just need to go to the IRS website, verify your bank information and identity, and then authorize an ACH (Automated Clearing House) debit from your bank account.

Advantages

• It’s free
• You can schedule payments up to a month in advance
• It’s done online
• You can change or cancel a scheduled payment up to two days before the payment date.
• Receive notifications about your payment status
• Same-day payments are possible

Disadvantages

• Business payments are not allowed
• It is not possible to pay from an international bank account with no U.S. affiliate
• It impossible to make two payments within a 24-hour range

2. The Electronic Federal Tax Payment System (EFTPS)

This is probably the easiest way to pay federal taxes. It’s a free payment method offered by the treasury. So, how does this method work? Go to the EFTPS website, provide bank and identity information. You will then receive an email within a week which contains a PIN. This will enable you to set up a password and authorize a funds transfer from your bank.

Advantages

• It’s free
• Can either be done via the phone or online
• Works for all federal taxes, including business taxes
• Same-day payments are possible
• You can get email notifications about the status of your payment
• You can schedule payments up to 365 days in advance
• You can change or cancel a scheduled payment until two days before the payment date

Disadvantages

• It takes more time to set up compared to direct pay
• Your bank may charge you if you let it initiate the payment on your behalf (rather than scheduling the payment online or via phone yourself)

3. Same-day wire transfer

If the deadline is too near, you can use the same-day wire transfer to the IRS.

Advantage

• Faster funds transfer

Disadvantages

• It is not free – a single transaction can cost you over$25
• You will be required to fill Same-Day Taxpayer Worksheet and drop it to your bank first
• You can’t change or cancel the payment once it is processed

4. Debit card

Paying your taxes with debit is easy but may not be the best option.

Advantages

• Can be done online or via phone

Disadvantages

• There are processing fees
• Your information passes through a third party
• Impossible to cancel a payment

5. Credit card

Paying by a credit card is easy, but just a debit card, it is not the best option

Advantages

• Can be done via phone or online

Disadvantages

• It’s costly
• High-interest rates
• Large amounts may affect your credit score
• You can’t cancel a transaction
• Your details go through a third party