Jun 2, 201404:10 PMSmall Business, Big Ideas
with Jean Willard
IRS offers a new direct-payment method
(page 1 of 2)
Do you owe the IRS for an item related to your individual 1040 return? Is the payment due within 30 days?
If so, you may want to take advantage of a new IRS payment system that allows you to make tax payments directly from your checking or savings account. For the time being, your payment can only be made toward a 1040 tax return from the past 20 years, extension payments, and estimated tax payments for 2014.
As you probably know, the IRS already has alternative ways for taxpayers to make payments. The agency has allowed you to pay by credit card for a number of years, but there was a fee associated with such a payment. You could also pay by EFTPS, but some people find that system confusing and need it set up more quickly than the IRS typically responds.
This new direct-payment method is different. Here’s how: As the June 15 estimated tax payment deadline looms, you might decide you want to schedule your payment a few days in advance — with the payment to take effect on June 15. The IRS allows payments to be scheduled up to 30 business days in advance, and the payments are then withdrawn from your bank account on the day you desire.
So how does this work? There are five steps that must be followed each time you make a direct payment:
- You need to provide your tax information. (Are you paying a prior year tax return, your 2014 estimated taxes, etc.?) You need to indicate the year and the reason for payment.
- You must verify your identity. This is done for each payment. You simply select a tax year — within the last five years — and information from that year’s tax return is used to confirm your identity.
- Once your identity has been confirmed, you can enter the payment information — bank account information and amount to be paid.
- You are then required to review and electronically sign the transaction.
- Then you need to print or record your online confirmation number.