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Think there’s only one way to pay your taxes when you have an amount due? Sure, in years past that was the case. You could send a check along with your filed tax forms and that was pretty much the extent of it. Paying taxes was part of the reason why tax time was such a pain for every hard working person in America.
Now, though, technology has made it where you have lots of options when it comes time to fork over your hard-earned money. However, you can’t utilize them if you don’t know what they are, so we thought we would take a quick look at your options to help you out. One of these should help you comply with your tax obligation with no problem.
EFTPS
The Electronic Federal Tax Payment System is the biggest way you know the times have changed. The IRS set this system up with YOU in mind – it’s a super simple way to pay not only your federal taxes but other taxes like quarterly estimated taxes with minimal effort. It’s honestly a little amazing this exists.
With just some simple info, like name, address, and social security number, you can sign up for an account. Then just enter your bank info so money can come out automatically. You can now schedule payments for up to a year in advance. This slick automation allows you to get payment scheduling out of the way and concentrate on actually running your business.
(Check out our handy guide to setting up EFTPS to pay your small business taxes.)
Payment Plan
Can’t pay everything at once but don’t want to bother getting an account and scheduling your own payments? Then a payment plan is just what you need. These work basically the same as they did in the past, where you simply submit Form 9465 (plus Form 433-F if you owe more than $50,000) and begin payments.
The good thing about the payment plan option is after you set it up it runs by itself. You just have to make sure you have enough money in the bank. On the other hand, if you incur any more tax debt, you have to refile for another payment plan. Just keep up with your payments and you’ll be fine.
Credit Cards
If your payment is low enough you can pay it all at once, you may want to use a credit card rather than send a check. The good news is you can! The bad news, though, is the IRS doesn’t actually take credit cards. You have to go through a payment processor. This means you’ll be charged a fee – either a few bucks or up to a large percentage depending on a few factors like the card you use and the amount you owe.
The good thing, though, is this will eliminate your tax obligation so you can concentrate on the rest of your business life. You can still send a check, by the way, just like the old days, and skip the credit card fees. The only catch is it will take a week or two to go through so you’ll have to wait for confirmation. But it is an option.
How do YOU pay your income taxes?