ISSUE:
Options for paying my taxes
RESOLUTION:
There are several methods to submit your tax balance due payment to the IRS using H&R Block At Home:
- Personal check or money order - This is the traditional method of paying when mailing a paper return. Be sure to write your Social Security number in the memo field.
- Electronic funds withdrawal - If you're filing a return electronically, you can pay via electronic funds withdrawal. The IRS will debit a checking or savings account. One benefit of electronic funds withdrawal is that you can specify the date of the debit, which means you can file early and still not pay until April 15th.
- Credit card - American Express, MasterCard, Visa or Discover can be used to charge taxes due. A convenience fee of 2.49% is applied at the time of payment. The convenience fee will be charged to your credit card as a LINK2GOV SERVICE FEE. Your credit card statement will show a payment to U.S. TREASURY TAX PAYMENT as proof of payment. (https://ltc.link2gov.com/taxcut0/default.aspx)
- Installment agreement - This method of payment has to be approved by the IRS by filing Form 9465. Following approval, the IRS agrees to let you make monthly payments for your debt instead of paying in full. In return, you agree to make timely monthly payments and pay all future tax liabilities. This means you must plan ahead. You must have adequate future withholdings or estimated tax payments so that future tax liabilities are paid in full when you file future returns.
The payment plan is guaranteed if you meet the following conditions:
- Your total liability does not exceed $10,000.
- You've filed all required returns and haven't had an installment plan in the last 5 years.
- You furnish all required information to the IRS.
- You agree to pay the bill within 3 years or less.
Interest, late payment penalties and a $105 ($52 if you make your payments by electronic funds withdrawal) processing fee apply if your installment plan is approved. If your income is below a certain level, you may qualify to pay a reduced fee of $43. Other requirements may also apply. To limit the amount of penalties and interest, pay as much of your tax bill as possible with your return. The IRS recommends considering other less costly alternatives, such as a bank loan, before requesting an installment agreement.
- The IRS also offers alternative payment options. Call the IRS at 1-800-829-1040 to make your request.
When considering which payment method best suits your situation, remember to carefully consider the interest rate on a credit card. An IRS installment agreement currently charges an interest rate which is the federal short-term rate plus 3 percent (currently about 7 percent), plus a late penalty of one-half percent (one-quarter percent for taxpayers who filed returns on time). Compare this to credit card rates of possibly 18 percent or higher. If you know you'll be paying taxes this year, know your options. It'll save you money, worries and penalties in the end.
Article ID: 23738
Date Modified: 00:00:00
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