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Turns out there are 10 things you need to know about making payments to the IRS. I have taken the liberty to mark a few things in bold. If you have discovered that you have to pay in more money than you expected and do not have the cash, there are options.
Mistakes I have seen most often include: Writing checks to the wrong entity, checks should be written to “United States Treasury.” Not including important info on the check including Social Security number, tax year, and tax form. If you work with a CPA, they usually provide payment vouchers to be mailed with payments. If you do not work with a CPA you can get payment vouchers online.
If you pay estimated taxes each year, you may want to enroll in the EFPTS online payment system. This makes paying taxes easy. Sign up for EFTPS at https://www.eftps.gov/eftps/.
Can’t pay all the taxes owed on time? IRS says:
1. Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
2.Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. IRS charges a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.
3. Request an extension of time to pay. For the current tax year (2011 at the time of this post), qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. Your application must be filed by the tax reporting deadline (April 17, 2012 at the time of this post).
The most important thing is not to delay. Understand you tax situation as soon as possible and make arrangements to pay. Do not ignore or delay in replying to letters from the IRS. Part of being organized is facing things as they arrive.
10 ‘need to knows’ about making tax payments per the IRS:
If you need to make a payment with your tax return this year, the IRS wants you to know about its payment options. Here are 10 important facts to help you make your tax payment correctly.
1. Never send cash!
2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
3. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.
4. Electronic payment options provide an alternative to checks or money orders. You can pay taxes or user fees 24 hours a day, seven days a week. Visit the IRS website at www.irs.gov and search e-pay, or refer to Publication 3611, Electronic Payments for more details.
5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
6. If you file on paper, you can enclose your payment with your return but do not staple it to the form.
7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
8. Always provide on the front of your check or money order your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number.
9. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently.
10. For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).