Now I Have To Pay

Now I Have To Pay

Monday, 18 February 2019 09:50

In a recent article I told you that many taxpayers are finding that they are getting smaller refunds, or actually owe with their return, because the Tax Cuts and Jobs Act of 2017 modified withholding tables for employees, resulting in less tax withheld. Please remember that in many cases your tax liability will be less than it was in 2017 given the same income and deductions, but the withholding tables may have been a bit too aggressive in reducing withholding so many are finding that they have to pay the IRS this year.

If you owe, first please remember that your return does not have to be filed until April 15th. If you choose to file now, your payment is still not due until April 15th. You have probably always gotten a refund, and because you wanted to get that refund as soon as possible, you have always filed early. That’s a great habit. There are plenty of reasons to file early, but even if you do file early, you can still delay paying until the last minute so if you don’t have the cash right now to pay, you still have time.

Now you’re ready to pay – what are your options? If you’re still in the 20th century, or maybe if you were just born in the 20th century (maybe pre-1990), you’ve always written a check and that’s still an option. But if you write a check, you have to mail the check. You don’t know for sure that your check arrived at it’s intended location unless you either spend extra money to track the payment or you wait until it clears your bank account.

Welcome to the 21st Century! There are two electronic methods of payment that have no additional cost and guarantee that your payment is received. The first method is Electronic Funds Withdrawal (EFW). This method is only available if you link your bank account to your tax return and you electronically file. I know you may be apprehensive because you’re giving the IRS access to your bank account but if you choose this method, you are only authorizing them to access your account one time and only for the amount specified. This method will pay your balance due immediately upon filing your return.

The second method is called Direct Pay. This method differs from EFW in that you don’t give the government access to your account, you send money from your account. This is safer (although EFW is safe and secure) if you don’t want the IRS to have your account number. With Direct Pay, you direct the payment to come from your checking or savings account through IRS Direct Pay, available on the IRS website (irs.gov). You can schedule the payment up to 30 days in advance and you receive instant confirmation when you submit the payment. You can change or cancel your payment two business days before the scheduled payment date and you can even receive email notifications each time you make a payment. You can even schedule a Direct Pay payment through the official mobile app of the IRS, called IRS2Go, available on the Google, Apple or Amazon platforms.

If you have questions about any of these payment methods, please contact our office. Also, if you have an idea for a future article, or just have a topic you would like more information on, please send me an email.

At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.