Paying your taxes
If you’re a business owner, individual, or self-employed individual, people always ask me, “How do I pay my taxes?”
Below I’m going to outline the different ways you may pay your taxes whether you are an individual that owes the IRS at the end of the year, or if you need to send them payments quarterly since you own a business and are self-employed.
Electronic Payments - EFTPS
The IRS has set up a website where you can create a website where you can and pay your taxes whenever you like. This site is called the Electronic Federal Tax Payment System (EFTPS for short).
I recommend anyone that owns a business set up an EFTPS account. The EFTPS account allows you to pay regular or quarterly tax payments at your discretion, by linking a bank account to the site.
Once you’ve created an account on EFTPS, they will mail you a four (4) digit PIN. It is very important that you always keep that PIN, since you will need the PIN every time you log into the website to pay your taxes.
Here is a link to sign up: https://www.eftps.gov/eftps/
Q: Do I really want the IRS to have my account number?
The truth is, there are multiple ways that the IRS can and probably can acquired your account number –
- If you bank with a major bank, the can find your bank account rather easily.
- If you have requested a direct deposit of a refund, they already have your account number.
- If you’ve mailed them a check, they keep electronic copies of your checks, that show the account / routing number on them.
When do I have to us the EFTPS?
You must use the EFTPS if you are either a:
- C Corporation
All others can pay by check or credit card.
Paying by check
If you pay with check, you should make sure to follow the details below so the IRS knows how to process your payment. The information you need to have when you mail a check to the IRS is:
- Make the check out to U.S. Treasury (not IRS)
- Put your SSN in the memo line
- Put the Tax Year on the memo line
- Put the Form # on the memo line
An example to write on the Memo Line is:
“TY: 2020, Form 1040, SSN: 555-34-1212”
IRS one time Direct Pay
Q: Can I pay by credit card?
There are various companies and websites online that may let you pay via credit card, however they charge you back the merchant card processing fee + other fees for using their services.
We recommend either Check or Direct Pay, so you may save on those additional costs.
The creator of TaxedRight!