If you owe a debt that cannot be settled, then you are stuck paying it off. If you are paying off in full, these are the easiest ways to pay off the IRS:
The IRS Direct Pay System
1) IRS Direct Pay System – Make sure to select the appropriate year you are paying off. This links directly to your bank account.
If you are paying estimated tax payments, make sure to select 1040ES and it will apply to the current year.
If you are making a payment plan payment, select “1040, 1040A, 1040EZ,” then “Installment Agreement,” and then select the tax year to which you want the payment applied.
If you are paying off a 1040 individual income tax year make sure to select “Tax Return or Notice.” Then “1040, 1040A, 1040EZ.” Then select the tax year you want to pay off. You also would do this for making payments towards a tax year that is not in an installment agreement.
Credit card payments
2) Pay by Credit Card – If you are paying estimated tax payments, make sure to select 1040ES and it will apply to the current year.
Sometimes a tax payment is due but putting it on a credit card makes more sense. If you already have a back due to debt to the IRS and incur a new balance, it will default your payment plan or currently not collectible status. If you have had an Offer in Compromise accepted in the last five years, owing will default your offer if not paid in full.
Often paying by credit card is lower interest than the IRS’ combined interest and penalty rate.
Pay USA Tax is usually the cheapest option to pay by credit card. The IRS loves to recommend Official Payments, but the cost is slightly higher.
Pay USA Tax can be used for both personal and business tax payments.
Many vendors also charge an increased 2.29% rate for visas.
Add a 2% cash back card to that and you might even be saving a bit on your taxes overpaying them the normal way.
Check by mail
3) Pay by Mail – You can also pay the old-fashioned way, by check. To do this, send payment with a voucher if you have one. A voucher is not required. Whether or not you send a voucher, it is recommended to write the primary Social Security Number, Tax Year and Number (ie: “TY 2014”), and Form Number. Paying for estimated tax payment is notated slightly differently as shown below.
The memo line should look like this:
TY 2014, Form 1040, SSN# 555-55-5555
If you are making an estimated tax payment the memo line should look like this:
TY 2016, Form 1040 EST PAYMENT, SSN# 555-55-555
This ensures the IRS applies it correctly. If there is a time deadline for your payment, it is recommended to send it certified mail with a return receipt. The IRS often will misapply payments, so it is important to notate checks correctly.
It is strongly recommended to pay via an electronic payment method. Sometimes, the IRS does lose checks.
An important note on Estimated Tax Payments: If you have a pending Offer In Compromise with the IRS or plan to submit one soon, it is recommended to pay estimated taxes on a monthly basis until your Offer is complete.