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IRS Tax Payments - How Much to Pay, When to Send, Where to Send?

 

Ines Zemelman, EASep-20-2016

The ultimate goal of having your taxes prepared is finding out whether you owe anything to the IRS (or perhaps, vice-versa). Lucky taxpayers who owe no tax do not have worry about payment logistics. For those who do owe tax, it is paramount to send the right amount to the right address and at the prescribed time. Otherwise penalties will accrue and increase this (already unpleasant) item of expense.

>A copy of tax return furnished to you by your tax preparer will include different types of payment due slips. It is important to know the difference and to know what each voucher covers.

This article will cover Payment Vouchers, Estimated Tax Payments, and Installment Agreements.

Payment voucher form 1040-V - provided with your tax return

This form shows payment due to the IRS. We recommend that you use one of the electronic payment options listed on the IRS website: https://www.irs.gov/payments If you are unable to pay electronically, you should mail a paper check to the address provided to you in the Final Instructions file we give to all clients (the address will vary depending on your situation). You can also locate that address in the IRS instructions in the upper part of the voucher form.

  • If you live abroad but use a U.S. mailing address on your tax return then address on the payment voucher may be different from the payment address that tax preparer provided on your final instructions. We recommend to use the address shown on the instructions.  If you send payment to the IRS center for non-expat tax returns it will be applied to your account eventually but processing time will take longer.
  • Write the primary taxpayer name, Social Security, filing year and the main tax Form number on the check. The Main tax form number is prominent on the first page of your tax return (for personal returns this is Form 1040, 1040NR or 1040-X).
  • Always send the check along with payment voucher to prevent incorrect allocation of payment to another year or - even worse - to another taxpayer account.
  • Make payment as soon as you get the voucher to avoid penalties and interest accumulation.

State Tax Payment Vouchers

Every state offers a web payment option. You can create account with the state tax department and process payment online. If you prefer to send a paper check, then use payment voucher included with your state tax return. State payment vouchers look similar to the IRS payment voucher, although form number and format vary by state.  You can use mailing address shown on the form; it does not change if you live abroad.

Estimated Payment Vouchers

Your tax return may include estimated payment vouchers - do not confuse them with the installment payments for what you already owe. These vouchers are for advance payments towards the following tax year. Timely estimated payments will save you from the penalties for underpayment of estimated taxes.

Those vouchers are labeled as 1040-ES and have vouchers number on each voucher. Normally you would have to make 4 estimated payments - either online or by mail. You can prepay the entire amount in one shot if you want to get over with this and not to worry about missing the next payment date.  If you missed one payment - send more next time. You can manually change amount paid on the voucher. Rules for check writing are the same as for main tax payment: write payor name, social security number of tax ID of the company if you make payment for business. The filing year will be different: you have to write future year towards with you make the payment.


State return has its own estimated payment vouchers that require the same level of accuracy in payment logistics as do federal estimated payments.

Installment Agreement

If tax due to the IRS is too large to be paid at once you can enter into an Installment Agreement. We can file an installment agreement application with your tax return or you can submit the request to the IRS by filing form 9465 after the return is filed. Once your application for installment agreement is approved, you must make scheduled payments on time.

Do not confuse installment agreement payments with your current year tax payments or estimated payment for the following year. You will not get vouchers for the installment agreement and you must continue to make payments by the approved  installment schedule.

Zemelman
Ines Zemelman, EA is the founder of Taxes for Expats
She may be reached at: +1-646-397-2887