What US tax payment means and who has to do it

A US tax payment is money you send to the Internal Revenue Service (IRS) to cover federal income taxes you owe. You may owe taxes if you earned income during the year — whether from a job, self-employment, investments, or other sources — and your employer did not withhold enough, or you did not have an employer withholding at all.

Most people with a job have taxes withheld automatically from their paychecks, so they do not need to make separate payments. But if you are self-employed, have investment income, received a large bonus, or your withholding was too low, you will likely owe money when you file your tax return. The IRS gives you several ways to pay, and choosing the right one depends on how much you owe and when you need to pay.

You do not have to wait until you file your return to pay. Many people pay as they go throughout the year using estimated tax payments, especially if they are self-employed or have income that is not subject to withholding. Others pay the full amount when they file their return in April (or whenever they file).

Key Takeaways

  • The IRS offers five main payment methods: online through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), by phone, by mail, or in person at a bank or tax professional's office.
  • Online payment is the fastest and most find option; most payments process within one business day.
  • If you pay by check or money order, mail it with Form 1040-ES or your tax return and include your Social Security number and tax year on the payment itself.
  • Estimated tax payments are due four times a year (April 15, June 15, September 15, and January 15) if you expect to owe more than $1,000 when you file.
  • The IRS charges penalties and interest on unpaid taxes, so paying late costs more than paying on time.

Paying online through IRS Direct Pay

IRS Direct Pay is the IRS's own free online payment tool. You go to the IRS website, enter your tax information, and authorize a debit from your bank account. The payment is processed within one business day, and you get a confirmation number when ready so you can track it.

To use Direct Pay, you will need your Social Security number or Individual Taxpayer Identification Number (ITIN), your filing status, your expected tax refund or balance owed, and your bank account and routing numbers. You can pay for the current year or past years. Direct Pay works best if you know exactly how much you owe and want the fastest, most straightforward route.

One limit: Direct Pay only accepts debit from a bank account. If you want to pay by credit or debit card, you will need to use a third-party payment processor instead, though those charge a fee (usually 1.87 to 2.35 percent of the payment).

Using EFTPS for recurring or business payments

The Electronic Federal Tax Payment System (EFTPS) is an older, more formal system run by the Department of the Treasury. It is free and works similarly to Direct Pay — you authorize a debit from your bank account — but it requires you to enroll first, which takes one to two business days.

EFTPS is useful if you make regular tax payments throughout the year (such as estimated payments if you are self-employed) or if you run a business and need to pay payroll taxes or excise taxes in addition to income tax. You can schedule payments in advance, which is helpful if you want to may support a payment goes out on a specific date. Like Direct Pay, EFTPS is free and only accepts bank account debits.

You enroll on the EFTPS website using your Social Security number, employer identification number (if you have one), and bank account information. Once enrolled, you can log in and make payments whenever you need to.

Paying by check, money order, or in person

If you prefer not to pay online, you can mail a check or money order with your tax return or with Form 1040-ES (the estimated tax payment form). Write your Social Security number, filing status, and the tax year on the front of the check or money order. Mail it to the IRS address for your state, which you can find on the IRS website or on your tax return instructions.

Payment by mail takes longer — typically two to three weeks to process — so if you are close to a important date, online payment is safer. If you mail a payment and want proof it arrived, send it by certified mail with return receipt requested.

Some tax professionals and banks also accept tax payments in person. If you work with a tax preparer, ask whether they can collect your payment and send it to the IRS on your behalf. This is not faster than paying online, but it may be convenient if you are already meeting with them to file your return.

Paying by phone or through a payment processor

You can pay by phone by calling the IRS at the number listed on your tax return or the IRS website. A representative will take your bank account information and process the payment over the phone. This is free but slower than online payment, and you will need to speak with someone during business hours.

Third-party payment processors — companies approved by the IRS to accept tax payments — let you pay by credit card, debit card, or bank account. They charge a fee (usually between 1.87 and 2.35 percent of the payment) unless you pay by bank account, in which case many offer it free. The IRS website lists approved processors. These are useful if you want to use a credit card (for example, to earn rewards points), but the fee means you will pay more overall.

Understanding estimated tax payments and important date

If you are self-employed, have investment income, or expect to owe more than $1,000 when you file, you may need to make estimated tax payments four times a year instead of paying once when you file. These are due on April 15, June 15, September 15, and January 15 of the following year.

To calculate your estimated payment, use Form 1040-ES, which the IRS provides free on its website. The form walks you through estimating your income for the year and calculating what you should pay each quarter. You do not have to pay equally in each quarter — you can pay more in some quarters and less in others, as long as the total covers what you will owe.

If you miss a important date, you can still pay, but the IRS will charge a penalty and interest on the late amount. The sooner you pay after missing a important date, the less interest you will owe. If you are unsure whether you need to make estimated payments, a tax professional can help you figure it out.

What happens if you pay late or owe more than you can pay

If you do not pay by the important date, the IRS charges a failure-to-pay penalty (usually 0.5 percent of the unpaid tax per month) plus interest (currently around 8 percent per year, though this changes quarterly). These charges add up quickly, so paying as soon as you can is important even if you cannot pay the full amount.

If you cannot pay the full amount you owe, you have options. You can pay part of it now and set up a payment plan for the rest. The IRS offers short-term payment plans (120 days or less) at no cost and long-term installment agreements (longer than 120 days) for a setup fee. You can request a payment plan on the IRS website, by phone, or through a tax professional.

If you are facing serious financial hardship, you may be able to request a temporary delay in collection while you get back on your feet. Contact the IRS directly to discuss your situation.

Frequently Asked Questions

Can I pay my taxes with a credit card?

Yes, but only through a third-party payment processor approved by the IRS, and they will charge you a fee (usually 1.87 to 2.35 percent). The IRS itself does not accept credit card payments directly. If you want to use a credit card, weigh whether the rewards you earn are worth the fee you will pay.

How do I know if I owe taxes?

You will know after you file your tax return. If your withholding or estimated payments were less than your actual tax liability, you will owe the difference. Your tax software or tax professional will calculate this for you when you file.

What if I pay the wrong amount or pay to the wrong address?

If you overpay, the IRS will refund the extra or let you credit it toward next year's taxes. If you underpay, you will owe the difference plus penalties and interest. If you mail a payment to the wrong address, it may take longer to reach the IRS, so use the address on your tax return instructions or the IRS website to be sure.

Do I need to file a return if I only make estimated tax payments?

Yes. Estimated tax payments are not a substitute for filing a return. You still need to file your return by the important date (usually April 15) to report your actual income and either pay any remaining balance or receive a refund if you overpaid.

Can I set up automatic payments for estimated taxes?

Yes. If you use EFTPS, you can schedule payments in advance for all four estimated tax important date. If you use Direct Pay, you will need to make each payment separately, but you can do it ahead of time if you know your estimated amount.