IRS service center changes continue
Tax Guide 2008

Paying the tax man

Tax_tip_icon_pencil_point If you end up owing the IRS this tax season, how will you pay?

Many folks now charge their tax bills. Even though a service charge is involved when paying with plastic, they find the amount is more than offset by reward points or airline miles they earn.

And as long as you pay your credit card bill in full each month or at least pay it off relatively quickly, the associated interest charges aren't an issue.

If a credit card is the appropriate payment method for you, the IRS has authorized two companies to process the charges:

Some of us have gone electronic. As noted several times here in the ol' blog, our tax bills, both regular 1040 and estimated, are paid via the IRS' Electronic Federal Tax Payment System, or EFTPS. This posting from September offers some thoughts if you're considering the e-payment system this tax season.

Quite a few folks, however, still send in paper checks to cover their tax obligations.

This method used to buy you a little bit of time, but modern banking systems have essentially eliminated the float. Still, despite the continuing effort of banks and the IRS, millions still insist on writing old-fashioned paper checks.

A fading payment method: A couple of weeks ago, I ran across an interesting blog item about checks. 

"The humble bank check days are numbered," says Smart Money Daily. "No one can deny the convenience, ease of use and speed benefits of the modern plastic [or] electronic fund movement systems. But when you scan through this collection of checks, you made find yourself, like me, feeling a sense of loss."

The collection to which SMD refers, found here, contains 15 "historical and interesting bank checks" that offer a fantastic snapshot of money movement. Among the checks is one from the purchase of Alaska, alongside a utility payment by John Lennon.

Check them out. They're fascinating.

Pay to the order of ...: I'd like to add a personal check of my own to the list. Below is a relic from Riggs Bank N.A. of Washington, D.C.

Riggs_check_3_3

The hubby and I opened an account with Riggs shortly after moving to the national capital area. Maybe we were two young kids swayed by the bank's boast of being "the most important bank in the most important city in the world."

Or maybe it was because a branch was convenient and offered a local credit card with our account, enabling us to build up a D.C. area credit history more quickly.

Or maybe we just liked the shots of D.C. monuments on the checks, like the one above of the Capitol Building. Others included the Lincoln, Jefferson and Washington memorials.

When we moved from the D.C. area, we had to change banks. Riggs was still an independent financial institution with only regional offices and we decided we needed national reach, especially when it came to ATM service.

It's just as well we severed our connections when we did.

A few years later, Riggs was defunct, the victim of financial improprieties connected to some of its once highly-touted "most important" connections. One of those ties was with a former world leader who had his own tax troubles (blogged here).

Plastic float: The hubby and I don't write many checks nowadays. A few local vendors don't take credit cards, so we have to dig out our checkbook and pay them the old-fashioned way. But mostly we charge our purchases.

A big reason for plastic payments is to recapture the cash flow float that's been eliminated by banking procedures that allow paper checks to clear almost immediately anymore.

Since we pay off our credit card bills in full when they arrive, we don't have to worry about the added interest.

And for at least for a couple of weeks between charges early in the billing cycle and the statement's due date, our money stays in our bank accounts, earning us a little interest.

But we keep a few checks on hand to write now and then, as well as the Riggs ones for nostalgia's sake.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

eFile

I guess I have always been lucky and get a tax refund. Someday the kids will grow up though and the EIC will be gone... sniff sniff

SingleGuyMoney

I will go the old fashioned way and just mail them a check on April 14th.

The comments to this entry are closed.