Will you be making a payment with your tax return this year? Hopefully not, but with tax filing day quickly approaching, chances are there are many out there who will be making payments.
If that’s you, it is important that payments are made properly to avoid penalties, unnecessary IRS notices or worse, theft.
Here are several important things you should know about making tax payments correctly. Following these tips will protect you, speed processing of the return, and help ensure the payment is applied accurately.
NEVER ever send cash! I am amazed at how often I hear of people sending cash through the mail. That’s not wise, especially sending it to the IRS. You might as well be begging to pay your taxes twice, plus some penalties.
If you file your returns electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card. However, you will be charged a convenience fee by the private company that provides this service.
One silver lining - if you itemize, you may be able to deduct the convenience fee as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
Electronic payment options provide an alternative to paying taxes by check or money order, as well as avoiding the convenience fee associated with credit and debit card payments. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search EFTPS for more details and to register.
If you do pay by check or money order, it is best to enclose your payment with your tax return, but don’t staple it to the form. Also, complete and include Form 1040-V, Payment Voucher, when sending your payment to the IRS. This will help the IRS process your payment accurately and efficiently.
Your check or money order should be made payable to the “United States Treasury.” It is important to write this out completely to avoid check tampering. Never abbreviate and do not make your check out simply to “IRS”, as this can easily be changed to someone’s name.
Always provide your correct name, address, the Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
Page 2 of 2 - And don’t forget this important fact; even if you are filing for an automatic extension of time to file your return, payment of at least 90% of the taxes due still must be made on or before April 15th, otherwise interest and penalties will apply.
Lane Keeter, CPA is Office Managing Partner of the Heber Springs Office of EGP, PLLC, CPAs & Consultants