There are lots of reasons you have a balance due with your 2021 tax return instead of that refund you normally receive. The Advance Child Tax credit payments caused it for some, the health insurance payments made on your behalf, or one of many other reasons can cause an unexpected balance due. Since we’re less than two weeks away from payment day, I thought I would review some of the ways you can pay your tax bill.
Since most tax returns are now filed electronically, the days of signing the return and mailing it along with a check are mostly gone. However, most taxpayers still pay the old-fashioned way by writing a check and mailing it along with a payment voucher to the IRS payment center. We know of several taxpayers that paid this way last year and it took weeks or months for the check to be cashed.
Not that this year isn’t unusual in many ways, but last year was certainly a challenge for both the US Postal Service and the IRS. I can’t predict if we’ll have the issues this year that we had last year, but those challenges make electronic payments much more appealing. There are several electronic payments methods available, and I encourage you to choose one.
Perhaps the easiest method is to choose electronic funds withdrawal when you e-file your tax return. This free service allows your payments to be drafted from your selected account on the due date.
I wrote earlier about the many benefits of setting up an online account at IRS.gov. Along with being able to check the status of your account and get other information, you can pay your 2021 balance, set up estimated tax payments, or send a payment for an extension to file. There is also no additional cost to make payments using this method.
If you don’t have an online account, the IRS has a service called IRS Direct Pay, available on the IRS.gov website, where you can pay electronically. You can schedule payments up to 365 days in advance using this method, and you can also choose to receive email notifications when payments are made. There is not additional cost for using this service.
All of the prior payment methods involved you paying with a draft from a checking or savings account. The IRS will accept payments using debit or credit cards. You can set these payments up online or over the phone. Please be aware that any payments by debit or credit card incur an additional fee that could increase your cost substantially so be sure you know the total cost before choosing this payment method.
Because the government prints our money, the IRS will accept cash payments. To make a cash payment at one of the more than 60,000 participating locations, visit IRS.gov and follow the instructions.
If you just can’t pay your balance due in full by the due date, it is generally very easy to set up monthly payments. Interest, penalties and a service charge may apply, but you can set up an online payment agreement through your tax preparer by filling out a form to file with your tax return, or you can go to IRS.gov and set up the payment plan right on their website.