How To Pay Your Taxes

While it will never be a pleasant experience, the Internal Revenue Service has taken steps in recent years to make it easier for U.S. taxpayers to pay their taxes. The agency now offers a number of electronic options for both paying your tax bill and setting up an installment plan that allows you to make monthly payments toward your federal tax liability.

The following options should be available for all types of tax payments, regardless of whether you are filing your annual federal income tax return that shows tax due or have received an IRS notice stating that you owe the government money.

Online Payment Options

The easiest way to pay taxes is online because the IRS offers various payment options. You also have the option to either pay when you submit your return or schedule a future payment. However, if you schedule payment for after the April 15 due date, you will be subject to late payment penalties and interest.

Direct Pay From Your Bank Account

Taxpayers may make a payment to the IRS through their checking account or savings account. If you use this payment method, you will also not be charged any transaction fees. The agency's Direct Pay service is available on the IRS's website and lets you both make payments directly from your bank account and check the status of your payment. Additionally, Direct Pay allows you to schedule a payment up to a year in advance.

Taxpayers who e-file using tax preparation software or a tax professional can set up direct payments with the IRS. This will save you the effort of setting up the payment yourself.

Payment by Credit or Debit Card

The IRS accepts payments made by credit or debit card, but it does so through third-party processing services that charge additional fees. Visa, Master Card, Discover, American Express, and most other major credit cards are accepted.

The processing fees for debit card payments generally run from $2.14 to $2.50 per payment, while the cost for paying by credit card is between 1.8% and 2% of the payment amount (with a minimum fee of $2.50 to $2.69).

Digital Wallets

The services the IRS uses to process debit and credit card payments also allow taxpayers to make payments using digital wallets like PayPal, Click to Pay, and Venmo. The fees for using a digital wallet are generally the same as those used for credit cards.

Cash Payment

Taxpayers who don't have a bank account or credit card can use Vanilla Direct to pay with cash. The taxpayer deposits their money into a Vanilla Direct account using a participating retailer. The retailer then credits the cash payment to the taxpayer's account to pay the IRS.

Paying by Check

Taxpayers still have the option of paying the IRS by mail using a check or money order. Include the payment with your mailed federal income tax return or payment voucher. The check or money order should be made out to the U.S. Treasury and must include the following taxpayer information:

• Name and address
• Daytime phone number
• Social Security number or employer identification number
• Tax year
• The tax form or notice related to the payment

IRS Payment Plans

If you owe money to the IRS and don't have the funds available to pay the full amount due, the agency usually allows you to set up a payment plan that will let you make payments under an installment agreement. The IRS offers long-term and short-term payment plans, depending on the amount of tax you owe and how quickly you can pay it off.

While payment plans sound like a great option for anyone who owes money to the IRS, it is usually recommended that you only set up an installment agreement if you have no other options. That's because the IRS will continue to charge you penalties and interest on any unpaid amounts until the bill is fully paid.

Still Have Questions? A Tax Lawyer Can Help

If you owe money to the IRS and are trying to figure out the best way to pay your tax bill, a local tax attorney can help. A tax lawyer can assess your financial situation and help you find a payment solution that works best for you.