Ah, January! A new year, new challenges, new opportunities and old tax tasks.
The Internal Revenue Service doesn't give us much time to settle into a new tax year. In fact, it's right there, barely two weeks in, reminding many of us that we have a major tax obligation from the prior tax year to take care of or else.
I'm talking, of course, about estimated taxes. These four extra tax payments are made by folks who get income that doesn't have income taxes withheld. If you don't pay, or don't pay on time, you'll end up owing penalties, too.
I mentioned estimated taxes last week in my 4 tax moves to make in January, but it's worth another reminder now.
Final ES payment deadline near: Your final tax year 2017 estimated tax payment is due Jan. 16.
The due date generally is the 15th of the four estimated tax months — a table with those dates is in my earlier post — but that date falls this year on this coming Monday, which is the Dr. Martin Luther King, Jr. federal holiday.
That means the final estimated tax deadline gets pushed to the next business day, Tuesday, Jan. 16.
You know you have to pay that final amount. You know when it's due. You've calculated how much to pay.
Now you just have to do it. Here are the many ways the U.S. Treasury will take your estimated tax money.
1. Pay Online
The IRS offers a variety of electronic payment options and it encourages us — yes, the use of this pronoun is deliberate; I'm a 1040-ES filer, too — to find and use the one that's right for us.
The agency promotes e-payments as secure and convenient. It also makes things easier for the IRS, too, since it doesn't have to mess with clearing paper checks.
You can find more details on sending in your taxes electronically at the IRS' special payments page. But here's a quick preview:
- Direct Pay allows online transfers directly from your checking or savings account at no cost to you.
- Pay by Card lets you pay by debit or credit card. In these cases, a service fee is charged by the payment processors. (More on these vendors in a minute.)
- Electronic Fund Withdrawal (EFW) is an integrated e-file/e-pay option offered when you file your federal tax return electronically by using commercial tax preparation software, including via Free File, or hire a tax pro to prepare and e-file your return.
- Online Payment Agreements are available if you cannot pay your tax bill in full by the April filing deadline. You can apply for an online monthly installment agreement at the IRS website. Once you complete the online application, you'll receive immediate notification of whether your agreement has been approved. A user fee is charged.
- IRS2Go is the IRS' mobile app with which you can access Direct Pay or Pay by Card.
2. Use EFTPS
Electronic Federal Tax Payment System (EFTPS) is an e-payment option created by U.S. Treasury. You tell EFTPS how much you want to pay for what tax purpose and when you want the money sent directly from your bank account to Uncle Sam.
This is my preferred electronic tax payment method. I like it partly because it's free, partly because I can set-and-forget estimated payments and mostly because it's been around a while, well before other online options. It debuted in 1996 and I signed up for it not long after that. Yes, I'm a tax geezer!
To use EFTPS (pronounced eff-tips in case you want to tax name drop), you must enroll. You can do that either online or have an enrollment form mailed to you.
Note that this takes about a week. So you might not be able to get this set up by next week's 1040-ES deadline. But once you're in the system, you can schedule all your estimated tax payments for the full year. Then all you have to do is remember to have enough money in your paying account to cover the quarterly payments.
3. Pay by Phone
Remember those? Guess what? That digital device you use to text, post crazily filtered Instagram photos and web surf probably can call, too. Check it out.
Seriously, though, if you aren't comfortable going online to pay your taxes, just phone it in. You can call one of the debit or credit card processors OK'ed by the IRS or call EFTPS.
You can call one of the IRS-approved debit or credit card service providers or use the Electronic Federal Tax Payment System (EFTPS) phone payment option.
The three debit or credit card payment vendors are:
- WorldPay US, Inc. 1-844-729-8298 (1-844-PAY-TAX-8TM)
- Official Payments 1-888-UPAY-TAXTM (1-888-872-9829)
- Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040)
Remember, each vendor charges a fee that varies by provider, card type and payment amount.
If you've signed up for EFTPS and want to pay by phone rather than online, call the system's toll-free tax payment number (800) 555-3453. It's available 24 hours a day, 7 days a week.
But before you punch in the number, gather your information, including your EIN if you're making a business payment or your Social Security number if paying as an individual taxpayer and the EFTPS PIN you got in the mail.
Also know which tax form number is associated with your payment. For individual filer estimated payments, you choose the 1040 series.
Then just follow the voice prompts to make your telephonic tax payment.
You can cut it close with EFTPS. Payments can be made by 8 p.m. Eastern Time the day before the tax due date. I'm as big a tax procrastinator as anybody, but I don't recommend cutting it this close.
4. Go Mobile
Now about that mobile device that you don't use as phone. Use it to pay your tax bill, including estimated tax amounts, by downloading the IRS2Go app.
5. Snail Mail a Check or Money Order
Some folks still like paper payments. I've done this when I didn't schedule a payment for whatever reason. OK, the reason was I had to transfer money to my checking account to pay my tax bill.
In that case, mailing your tax payment has an advantage. You meet your estimated tax obligation by simply getting the payment in the mail in time to get it postmarked by the due date. Just like when send in your annual tax return, the postmark counts as timely filing.
The day or so it takes the voucher and check to get to the IRS should give your bank time to clear the transfer so that your check won't bounce.
If you opt for old-school mailing, you'll need to download the estimated payment voucher (shown below) from the IRS website.
There is a separate estimated tax payment voucher for each due date, shown in the upper right corner. If you and your spouse plan to file separate returns, file separate vouchers instead of a joint voucher.
Make your check or money order payable to "United States Treasury," not the IRS. Write "2017 Form 1040-ES" and your Social Security number on your check or money order. If you are filing a joint estimated tax payment voucher, enter the tax identification number that you'll enter first on your joint return.
Enclose, but do not staple or attach, your payment with the estimated tax payment voucher. And check the mailing addresses, based by your state of residence, at the back of the 1040-ES form to find the correct address to which to mail your payment.
And do not mail cash.
6. Pay in Cash
You can, however, pay in cash thanks to a relatively new in-person payment option. The IRS teamed up with Official Payments and PayNearMe in 2016 to create this option.
Basically, you can head to a nearby participating brick-and-mortar retail partner — which happen to be select 7-Eleven stores in 34 states — and make a maximum $1,000 per day tax transaction.
Use PayNearMe's online search tool to see if there's a location near you.
Found one. Nice. But don't head out so fast to your local 7-Eleven to pick up a Slurpee and pay your taxes.
Before you can send the IRS a cash payment, you first must register online at Official Payments and Official Payments only. It's the sole IRS-approved payment provider tapped to handle cash tax payments.
In addition to the time it takes to do that, note that it usually takes two business days for your payment to post to your account. So be sure to make your payment in plenty of time before your due date to avoid interest and penalties.
And, of course, there is a fee. Official Payments collects $3.99 per payment regardless of amount paid.
Wow. The IRS certainly is doing its job when comes to ways to collect our tax money. All of these options give us plenty of choices in paying our estimated tax amounts.
Now we just have to choose! And do so by Jan. 16.
You also might find these items of interest:
- The scoop on paying estimated taxes
- 3 ways to navigate estimated tax penalty safe harbors
- Amounts you'll need to calculate your estimated tax payments