The Best Way to Pay Your Taxes to the IRS

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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.