Tax - Government - Paying Taxes to the IRS

The Best Way to Pay Your Taxes to the IRS

Intro

Tax Day is almost here, which is April 18, 2023. If you’ve been following the news, you’ve probably heard Janet Yellen warning about the US Treasury running on fumes. According to Joe Biden, paying taxes is patriotic. So if you’re feeling like a patriot, and want to throw Janet a lifeline, you may be wondering what the best way is to pay your taxes to the IRS. There are several ways to do this, but which is the best way for individuals? Should you:

  1. Mail a check or money order?
  2. Use Electronic Funds Withdrawal?
  3. Use IRS Direct Pay?

In this episode, we discuss these options, their pros and cons, as well as which may be best for you.

Podcast

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Okay, listen up people. Turn up your volumes. It’s time for another Bigger Insights Finance

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episode. Tax Day is approaching. It’s April 18th this year in 2023. If you follow the

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news at all, you’ve probably heard Janet Yellen warning that the United States Treasury

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is basically running on fumes. Joe Biden says that paying taxes is patriotic. So if you’re

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feeling like a patriot and you want to throw Janet a bone, you’re probably wondering to

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yourself, “I should pay some taxes, but what’s the best way to pay the IRS?” Well, wonder

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no more because we’ve got you covered here at Bigger Insights. The best way to pay the

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IRS is, you don’t. Okay, that’s it everybody. Thanks for tuning in. Be sure to smash that

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like button or whatever gimmick there is on your preferred platform. All right, so before

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I get no-knock raided at three in the morning, just kidding everybody. We probably should

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have done this on April Fool’s Day. That’s a missed opportunity. Bigger Insights recommends

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that you pay your taxes in full and on-time. But in all seriousness, there are several options

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for paying taxes to the IRS, some better than others. We’re going to explain some of these

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options in this episode, as well as our opinion as to which one might be best for you. But

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before we get started, bear in mind that we are not accountants, tax attorneys, enrolled

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agents, or other tax professionals. So be sure to run any of this by your tax advisor.

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Also note that we’re going to be focusing on paying taxes for individuals in this episode,

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not businesses. The first method we’re going to discuss, which many recommend for some

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reason, is to mail in a check or money order. If you mail in a check, the IRS strongly recommends

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that you include all of the following information on your check: your name, current address,

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daytime phone number, and your Social Security Number (SSN). How stupid is that? At the same time,

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some other government agency, I think it’s the FTC, says you should never put sensitive

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information like a Social Security Number on a check. So what’s, what’s going on there?

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Basically the IRS tells you to do that because they “may”, in quotes, separate your check from

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your voucher. And when that happens, and Bob the Bureaucrat deposits your check, if he,

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it, or they can’t tell exactly who or what to apply that payment toward, they’ll just

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take your money, but that might not apply to your account. If that’s not government

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for you, I don’t know what is. And for those of you who don’t get the whole privacy and

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security thing, which by the way, we also produce a Privacy & Security podcast, so

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go check that out. You shouldn’t put sensitive information on a check because you don’t know

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who’s going to have access to that information. When a check gets deposited, at least one

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person handles it, which is a risk. It gets scanned and stored in who knows where and

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for who knows how long. That’s an additional risk. Those images could get leaked or they

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could end up being made public and some legal proceeding. What happens after it gets deposited?

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Does that person immediately shred it? Or does it get thrown to the side or filed away

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somewhere? That’s an additional risk. It’s an incredibly stupid thing to do. If you read

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about this particular issue online, a lot of people will say that they just don’t put

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their Social Security Number on their checks and they’ve never had a problem. But do you

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really want to roll those dice? If Bob the Bureaucrat does screw this up, you won’t even

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know until the IRS contacts you claiming that you haven’t paid your taxes. On top of that,

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are they going to demand that you pay interest and penalties, despite the fact that they actually

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have had your money? And don’t even get me started on the USPS. From what I’ve been

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seeing since, you know, the sickness, which we shall not speak of, they’ve been taking

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their sweet old time delivering letters. In many cases, up to 10 days, I’ve also had bills

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and tax forms not get delivered at all. So if you’re going to mail in a payment, especially

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if you’re going to be a high-roller like me and send it in last minute, you need to accept

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that risk as well. The second method we’re going to talk about is Electronic Funds Withdrawal.

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This is available in some tax filing software and is quick and convenient. If you have access

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to this, this might be your best option. However, you might not have access or your accountant

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may refuse to do this for you. I’ve actually spoken to accounts about this issue. And they’ll

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say that they don’t like to do this on behalf of their clients because if payment fails,

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for example, due to insufficient funds, then the IRS comes back and hassles them about

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it. This is just one of many examples as to why we can’t have nice things. Other people

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can’t manage their finances, so the responsible people among us have to suffer. Don’t be one

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of those people, follow Bigger Insights Finance or become a Bigger Insights client so we can

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make the world a better place for you, your family and society. If you’re interested in

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becoming a client, which you should be if you know it’s good for you, fill out the short

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form at the bottom of our website, biggerinsights.com, and we’ll reach out to you and schedule your

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initial consultation. If you can’t do Electronic Funds Withdrawal, your best option is probably

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IRS Direct Pay. Direct Pay is an electronic payment option on the IRS’s website. We like

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this option for a few reasons. One, this is through irs.gov, not some sketchy third-party

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website. You might have heard about this, but there is a tax filing site called efile.com

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that got hacked and hackers put malicious JavaScript code into that site, which may

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have affected anyone who visited their website. There are no fees for using IRS Direct Pay,

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which is a good thing. I mean, we need to pay fees to pay our taxes like we need a new

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hole in the head. The third thing that we like about it is transactions are very fast.

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The last time I submitted a payment through Direct Pay, the transaction cleared that day.

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The fourth thing that we like is you don’t need to make an account. There is no account

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system with Direct Pay. And this is great because every account that you have is more

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time and more risk. So with this system, once you submit a payment, they’ll give you a confirmation

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and a tracking number for you to follow up if you need to. The fifth thing that we like

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is if you choose the Extension reason, which we’ll talk about in a few minutes, they’ll

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automatically process an extension request for you. But just keep in mind, pro tip: An

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extension with the IRS is an extension to file, not an extension to pay. Your taxes

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are still due on tax day, pretty much no matter what the circumstances are. Now, for those

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of you who are new to government, you might be thinking, “Well, how am I going to know

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how much to pay if I’m not able to file yet?” All good questions. Again, this is the government

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we’re talking about here. As far as they’re concerned, that’s your problem, and you can

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go pound sand. You’re supposed to know and apply the tens of thousands of pages of the

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tax code, come up with your best guess and get it right. If you underpay, then you’ll

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have to pay penalties and interest. The sixth and final thing that we like about Direct

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Pay is the process is relatively simple. Now I say relatively because this is still the

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government, so they’re not going to make it too easy for you. One does not simply pay

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taxes. So if you’re Donald Trump and you owe $750, you can’t just send the IRS $750

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and call it a day. That would be too easy. You have to give them your name, Social Security

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Number, bank information, what year you’re paying toward. You also have to verify your

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identity, which is basically what name, filing status, date of birth, Social Security Number,

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address and other basic information that you provided in a previous tax year. Then they

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make you agree to a few things like agreeing to allow them to debit funds from your account

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and stuff like that. And it might sound like a lot, but it can really be done in just a

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few minutes, especially if you’ve done it before. There are also some things that we

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do not like about Direct Pay. First of all, the Direct Pay website has Google Tag Manager

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embedded into it, which is basically a creepy tracker that Google uses to track your activity

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across the web. You can and should block this, by the way, which we discuss these types of

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issues in our Privacy & Security podcast. And, you know, obviously we can help you do

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that if you’re a client, but you know, this, this really grinds my gears. I mean, this

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should be completely illegal. On the one hand, the government wants to complain on and on

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about how big and powerful companies like Google are. On the other hand, they embed

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Google trackers into their websites. Which basically feeds your private data to Google

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and other companies, which makes them bigger and more powerful. The other issue with this

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is the government forces you to deal with them. And, you know, if that’s the way you’re

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going to roll, the least you can do is not hand our data over to advertisers and other

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creepy companies. Is that really too much to ask? All right, rant complete. The other

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annoyance that we have is the Reason for Payment field. Again, one does not simply pay taxes.

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That’s not enough to just send the IRS what you owe. You have to give them a “Reason”. There

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are 15 such reasons. Most of these are pretty obscure and probably won’t apply to us humble

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peasants in most circumstances. But there are a few options which are kind of confusing.

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Not only are the descriptions confusing, but it doesn’t do a good job of explaining what

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the consequences are if you choose the wrong one. But other than that, it’s a pretty decent

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option. So if you’re feeling patriotic and you want to throw Janet a lifeline, search

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for IRS Direct Pay in DuckDuckGo or Startpage. We don’t want to give the direct link

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just in case of it changes. And we mentioned DuckDuckGo and Startpage because we don’t

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use or recommend Google search for privacy reasons. But when you do that, just be absolutely

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positively certain that whatever website you’re on is really irs.gov and not some scam site

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because there are a lot of them out there. Alright, that’s everything for real this time.

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Make sure you subscribe because we’re going to be producing a lot more great content like

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this and go be a patriot and pay your taxes.

Disclaimer

We are not CPAs, tax attorneys, or other tax professionals and nothing in this episode should be construed as tax, financial, or other advice. See our full Disclaimer for more details.

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