Ways to Pay Your Federal Income Tax

IRS Tax Tip 2012-68, April 9, 2012

If you cannot pay the full amount of taxes you owe, don’t panic. You should still file your return and pay as much as you can by the April 17 deadline to avoid penalties and interest. You should also contact the IRS to ask about payment options. Here are three alternative payment options you may want to consider and a tip on penalty relief under the IRS Fresh Start Initiative.

1. Pay by credit or debit card. You can use all major cards (American Express, Discover, MasterCard or Visa) to pay your federal taxes. For information on paying your taxes electronically, including by credit or debit card, go to /e-pay or see the list of service providers below. There is no IRS fee for credit or debit card payments. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95. Do not add the convenience fee or flat fee to your tax payment.  
   
   The processing companies are: 
   • WorldPay US, Inc.:  
     To pay by credit or debit card: 888-9PAY-TAX (888-972-9829), www.payUSAtax.com 
   • Official Payments Corporation: 
     To pay by credit or debit card: 888-UPAY-TAX (888-872-9829), www.officialpayments.com/fed 
   • Link2Gov Corporation: 
     To pay by credit or debit card: 888-PAY-1040 (888-729-1040), www.pay1040.com 
    
2. Additional time to pay. Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at www.IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 60 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time. There is no fee for this short extension of time to pay.  
    
3. Penalty relief. To assist those most in need, a six-month grace period on the late-payment penalty is available to certain wage earners and self-employed individuals. An approved request for a six-month extension of time to pay will result in relief from the late-payment penalty for tax year 2011 if: 
    
   • your income is within certain limits and other conditions are met;
   • your request is received by April 17, 2012; and
   • your 2011 tax, interest and any other penalties are paid in full by Oct. 15, 2012. 
    
   To find out if you are eligible and to apply for the extension and penalty relief, complete and mail Form 1127-A, Application for Extension of Time for Payment of Income Tax for 2011 Due to Undue Hardship. 
    
4. Installment agreement. You can apply for an IRS installment agreement using the Online Payment Agreement (OPA) application on IRS.gov. This web-based application allows taxpayers who owe $50,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement, eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, or Form 9465-FS, Installment Agreement Request, make your request in writing, or call 800-829-1040. For balances of more than $50,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. You may be able to avoid the filing of a notice of federal tax lien by setting up a direct debit installment payment plan. For more complete information see Tax Topic 202, Tax Payment Options and the Fresh Start page on the IRS.gov website.

   For more information about filing and paying your taxes, visit www.IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at www.irs.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).

Links:

• Online Payment Agreement Application
• Electronic Payment Options
• www.officialpayments.com
• www.pay1040.com
• www.payUSAtax.com
• Form 9465, Installment Agreement Request (PDF PDF)
• Form 1127-A, Application for Extension of Time for Payment (PDF)
• Payment Plans, Installment Agreements
• Partial Pay Installment Agreements
• Publication 17, Your Federal Income Tax (PDF PDF)

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