How to Actually Pay Your Taxes | Personal Finance | mooresvilletribune.com – Mooresville Tribune

How to Actually Pay Your Taxes

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Paying taxes on time is important to avoid IRS penalties. But how exactly do you pay your taxes?

Depending on your situation, you have a few different options for submitting the money you owe to the IRS — some of which are better than others.

Image source: Getty Images.

Here are your options for paying taxes

Most people do no have to pay the IRS any money directly. Instead, employers collect tax payments from each paycheck and send the money in for you. In fact, employers often collect more money than is owed and you have to file a tax return in order to claim a refund of your money.

If your employer doesn’t collect enough, though, or if you are self-employed or earn income from other sources, you may end up with a tax bill. If that’s your situation, your options to pay include:

  • Arranging a withdrawal from your bank account: This option is free. You can provide your bank information to your tax filing software program if you use an online program to do your taxes. You can also visit the IRS website to arrange the direct withdrawal of the taxes you owe from your bank account.
  • Debit card: You will need to use a third-party payment processing system to pay via debit card. These include PayUSA Tax, Pay1040, or ACI Payments, Inc. Fees apply to pay with a debit card, and range from $2.55 to $3.95 depending on which program you use and the amount you’re paying.
  • Credit card: You will also need to use a third-party processing system to pay via credit card. The same three websites that collect debit card payments also accept payments via credit card; however, the fees are much higher. You will pay between 1.96% and 1.99% to use your credit card.
  • Same-day wire transfer: The IRS provides a form you can take to your bank or other financial institution to arrange a wire transfer of your tax funds. Fees vary by financial institution, but this can be an expensive option.
  • Check or money order: You can send a check or a money order via mail to the IRS. You’ll need to find the correct address, which varies by state or by type of form. This option is free, although you pay a small fee to buy a money order.
  • Cash: You can pay cash at a retail partner but they accept payments only up to $1,000. You will have to pay a fee, which depends on where you go. For example, Walgreens and Family Dollar charge $1.50 per cash payment while 7-Eleven and CVS charge $3.99. You also have the option to buy a prepaid card and use the IRS2Go mobile app to make your payment.

For most people, the best option is to arrange for a direct withdrawal of your payment amount from your bank account either with the software program you use to file or with the IRS directly.

Regardless of which method you choose, however, be prepared to include information such as the amount you owe, the reason you are making the payment, and your Social Security number or taxpayer ID number so your payment can be correctly processed.

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