Dates and Payment Options for Your Federal Tax Bill
The IRS must receive personal income tax payments by April 18, 2023, for the 2022 tax year. Even if you ask for a filing deadline extension, you’ll still need to submit an estimated tax payment by the April deadline. You have options for filing and paying your taxes to the IRS: e-filing online, paying online, or mailing a check.
Let’s examine some additional tax dates, how to pay your taxes, and if you are unable to pay, what to do by the deadline.
Main Points
Typically, you must file your federal taxes in April of each year. You can file your taxes by mail or online, and you can pay them online or with a check.
While requesting an extension of time to submit your tax return won’t buy you additional time to make your payments, it can help you ensure that your return is accurate and that you’ve claimed all of the deductions and credits you are entitled to.
It is incredibly simple to pay electronically because to the two electronic payment systems offered by the IRS: Direct Pay and EFTPS.
If you are unable to pay the IRS in full right away, you can request an installment agreement. Interest will be charged on the balance you still owe.
When Should Taxes Be Paid?
Federal tax returns and payments are typically due on April 15; however, this date is subject to change. The deadline will be postponed if the 15th falls on a Saturday, Sunday, or official holiday. If you owe money on your taxes, filing early will help you get it sooner. The IRS starts taking tax returns in January.
penalties for filing and paying late
If you owe money, you might be tempted to put payment off as long as you can. Just be careful not to wait too long or you’ll end up with penalties in addition to your tax debt. Up to 25% of the outstanding balance is subject to a late payment penalty, which is calculated at 0.5% per month. Ten days after the government delivers you a final notice that it intends to levie or seize your property, the penalty increases to 1%.
You’ll also be required to pay interest on top of the late payment fee. The quarterly interest rate is determined by adding 3% to the federal short-term rate. That grows every day.
For each full or partial month that your return is late, there is an additional penalty of 5% of your outstanding taxes, up to a maximum penalty of 25% of your unpaid taxes. If your 60 days past due, there is a penalty of $450 (for your 2022 taxes that you submit and pay in 2023) or 100% of the taxes payable, whichever is lower.
Seeking a Prolongation
By sending Form 4868 to the IRS by the due date for filing your taxes, you can automatically extend the time you have to file your tax return. Although you still have to pay your taxes on time as a result of this, you now have until mid-October to carefully review and double-check your return, or have someone else do it for you, in order to identify ways to reduce the amount you owe.
Note
The extended tax deadline for 2022 taxes that are payable in 2023 is on Monday, October 16.
Check for any missed deductions or incorrect computations that you may have made. If you haven’t already, seek advice from a tax expert or file your taxes using reputable software. You might be qualified for a tax credit or deduction that you failed to take advantage of because you were unaware that it was available.
Your primary tax debt reduction is objective, if at all possible. Nevertheless, there is a catch: You must pay your whole tax due based on what you estimate you would owe based on your initial computations when you submit Form 4868 to request an extension.
If your tax bill ends up being too high, don’t stress. You’ll receive a return from the IRS. At least send as much as you can if you can’t pay your full balance. Right after the due date, penalties and interest begin to build up.
Alternatives for Filing Your Taxes
You can ask the IRS for some leniency, pay whatever taxes you owe online, or send the IRS a paper check. If you’re genuinely in a tight spot financially, you can usually negotiate payment arrangements.
The Federal Electronic Tax Payment System
The U.S. government manages an online service called the Electronic Federal Tax Payment System (EFTPS). Treasury Department to handle payments for federal taxes. It is not an option if you have a short amount of time before the payment deadline because you need to set up a profile account with your bank account details and wait to receive credentials in the mail.
To prevent you from having to enter your account information each time you make a payment, the website remembers your account information after you’ve registered. EFTPS is advantageous for those who must pay quarterly estimated taxes, such as self-employed individuals, for this reason.
A payment can be planned in advance. On the day you specify, it will be automatically deducted from your bank account.
Straight Pay
Moreover, the IRS provides Direct Pay, a web tool that makes it simpler to send rapid payments. You will need to enter all of this information each time you want to make a payment because our site does not save your bank account or personal information.
If you arrange a payment for a future date, you can go back and alter or cancel it up to two working days before the pay-on date.
Digital Wallet, Debit Card, or Credit Card
You must use an authorized payment processor if you want to pay with a debit or credit card, PayPal, or another type of digital wallet. There are three, and each one levies costs for processing. By processor and kind of payment, fees change. The IRS website provides access to the processors.
Warning
Remember that in addition to the processing fees, you will also pay interest or finance charges if you choose to pay with a credit card or PayPal over time.
Check
Another option is to mail a check with your payment to the IRS. Depending on the type of payment and where you live, the IRS provides many addresses for payments. On the IRS website, you may discover a complete list of addresses to assist you decide which one to use.
Create a payment schedule
If you are unable to pay your entire or even partial debt immediately, the IRS offers payment arrangements. The most crucial thing is to not disregard your circumstance in the vain hope that it would go away.
With the IRS, you can arrange a monthly installment plan that will let you pay off your debt over time. To some extent, you can even choose how much you wish to pay each month. In most circumstances, the full balance must be settled within 72 months, therefore your minimum payment would be equal to your outstanding sum divided by 72. While doing your calculations, account for interest and penalties.
Important
It’s not against the law to pay more each month than what you agreed to. By doing this, you can pay off the debt more quickly and spend less on interest.
The IRS will continue to impose interest and a late payment penalty, but it has been decreased to 0.25 percent every month. For a long-term installment plan, there is a one-time setup cost of $130, which rises to $225 if you don’t apply online. Nevertheless, this one-time processing cost decreases to $31 if you submit your application online and consent to having the monthly payments deducted from your bank account by direct debit. And if you meet the requirements, the IRS offers a $43 low-income startup cost alternative. If your debt is greater than $25,000, a direct debit is necessary.
If you owe less than $50,000, you are not required to submit a collection information statement to demonstrate your assets and income in order to be eligible for the installment arrangement. Applying online is possible through the IRS website’s Online Payment Agreement Application.
Additional Tax Payment Options
Consider private lending options depending on how much you owe and your credit score if you can’t pay. You’ll probably have to pay extra in interest. Yet, doing so would let you settle your tax bill without entering into a payment arrangement with the IRS. If you want to know whether this is the best choice for you, use a loan calculator.
Make a Monthly Payment Calculation
The sum, length, and interest rate of a personal loan will determine your monthly payment (which is highly dependent on your credit score). Get an idea of what your potential monthly payment would be by using the inputs below.
AMOUNT OF LOAN
LENDER TERM
Twelve months (one year), twenty-four months (two years), three years (three years), four years (four years), and sixty months (5 years)
Credit score is Excellent (800+), Very Good (740-799) Decent (670-739) Fair (580-669) Bad (-580)
PAYMENT PER MONTH
$ 519.98
Paid in full: $18,719.28
Interest paid overall
$ 3,719.28
Credit Amount
$ 15,000.00
If you can’t pay your tax obligation on a monthly basis or if you owe more than $50,000, get counsel from a tax expert to assess other options for resolving your tax problem. The IRS also takes into account compromise offers. Under some conditions, the agency might accept a payment that is less than what you owe. Both Form 433-A and Form 656 must be submitted.
Questions and Answers (FAQs)
How do you pay your estimated quarterly taxes?
If inadequate taxes are deducted from your paychecks, or if you earn income from self-employment or another source that doesn’t deduct taxes on your behalf, you may need to pay estimated taxes quarterly to avoid penalties. To estimate your taxes, use Form 1040-ES. To transmit payments before the quarterly deadlines, use the IRS’s online EFTPS payment tool or the postal service.
How are state taxes paid?
Each state has a separate organization that deals with tax filing and payments. For further information on how to file and pay your state and local taxes, visit the website of the relevant state agency.
What occurs if taxes are not paid?
Not paying taxes on time, you could be charged fines and interest on the unpaid balance. The longer you wait to make a payment, the more interest you’ll have to pay (penalties are capped at 25% of the balance due). If you accumulate a sufficient amount of debt, the IRS may pursue additional collection efforts, such as placing a lien on your property, such as your home or bank accounts. If you believe you will have difficulties paying your taxes, get in touch with the IRS right once to set up a plan and prevent these penalties.