IRS Payments

Updated April 2024 for Tax Year 2023

We recommend making online payments to the IRS, for speed, security, and ease of tracking. If you must mail a paper check, send it Certified Mail.

This page from the IRS site describes the various ways to make a payment:
https://www.irs.gov/payments

Best option:  Log in and pay from inside your IRS Account (we certainly recommend having access to yours! -- it takes about 15 minutes to go through the identity verification with ID.me). You can save your bank account and routing number for future payments, and your payment history is visible for the last couple of years. Only one spouse needs to pay a MFJ tax bill.
https://www.irs.gov/payments/your-online-account

Second-best:  Use Direct Pay "with bank account" (no processing fees). You may also pay by credit card (for a fee). It's quick and easy -- you do not create an account for this one-time payment option. Have a recently filed tax return at hand to answer the identity verification questions. Save a final screenshot and/or your email confirmation.
https://www.irs.gov/payments/direct-pay

NOTE: Direct Pay only provides confirmation of your payment submission. To be sure the payment was successfully withdrawn from your bank account, check your bank statement, or view your IRS account at least 48 hours after your requested payment date.
 

Payments with Extension

Although an extension gives you six more months to file your tax return, there is no extension of time for paying the income tax you owe. In other words, your 2023 federal and state taxes are still due on the original personal return due date of April 15, 2024. 

If you owe, you'll get hit with late-payment penalties and interest on the unpaid amount. These are proportionate to the amount owed, so owing a little is not a big deal. But owing a lot could be costly. The current IRS interest rate for underpayments is 8%, compounded daily -- the highest we've seen in years.

Filing and paying sooner than later after April 15th will curb the amount of interest charged daily and late-payment penalties, which are assessed each month your payment is late (at 0.5% of the amount due). If you missed our March 18th data deadline, take advantage of our summer filing season and get us your complete tax data by June 17th for filing by July 31st. (More info on our Due Dates page.)
 

How do you know if you should make a payment by April 15th? If you did year-end tax planning with The Business Guides, you should know the answer to this question, and you probably did additional payroll withholding or made a 4th Quarter estimated tax payment in January based on our analysis of your tax liability. Review your Tax Plan Report to see if additional tax liability was calculated but remains unpaid.

If you regularly receive a tax refund and your tax situation has not changed dramatically, you probably don't need to make an additional payment.

If you think you will owe taxes, here's our general advice: pay in for 2023 at least 100% of the tax shown on your 2022 return (110% if your AGI was over $150,000). Find your "total tax" on line 24 of last year's Form 1040, or on our three-year Tax Summary page, see OTHER TAXES > Total tax.

You may have already paid enough in to the IRS over the past year to cover 100% of last year's total tax -- add up your quarterly estimated tax payments, withholding on W-2 wages or retirement distributions, etc.  If you haven't paid in enough to cover 100% (or 110%) of last year's total tax, we recommend making an additional payment by April 15th to bring you up to that amount. This alleviates the underpayment penalty.

To minimize interest on unpaid taxes (remember, this is currently 8%, compounded daily):

• If you're comfortable overpaying and waiting to get a refund when your return is filed, then round up from what you think you will owe for 2023.
• If you'd rather underpay and owe a bit more (plus penalties and interest) when your return is filed, then round down from that amount.
   

Making an online payment (select Extension or Balance Due and make sure it's applied to your 2023 Form 1040 income taxes) may automatically file an electronic extension for you (read more about this on the IRS website). Take a screenshot of the confirmation page. It is helpful if you can send us that image and/or the confirmation email to add to your file. 

And if underpaying taxes stresses you out, let's do year-end tax planning! These consultations happen July through December, and can run into the first half of January for those without owner payroll. If interested, email Shelly to get on the outreach list.