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taxes

Your online tax-paying options

Taxes » Tax Filing » Your Online Tax-paying Options

Consumers are increasingly comfortable with online bill paying. So it's no surprise that Uncle Sam also wants to cash in on electronic money moving.

Leading the way is the federal agency that has the most direct contact with working Americans: the Internal Revenue Service. Last year, more than 119 million filed electronically, many because they were due refunds that were processed more quickly because their tax data were sent online.

Now the IRS is working to convince taxpayers that they, too, should go the electronic route when it comes to paying up. The agency has entered into partnerships with the private sector, including the banking industry, tax software developers and credit card processors, to make tax e-payments more appealing.

Here are the ways you can electronically move your money into the U.S. Treasury.

Credit card payments

Taxpayers can tell Uncle Sam to "charge it." And debit cards are part of the mix.

Official Payments, Link2Gov and WorldPay are the IRS-approved plastic processors. Each company accepts payments from electronic as well as paper filers, either via phone or the Internet, in Spanish as well as English.

American Express, Discover, MasterCard and Visa are accepted for charged payments. If you want to avoid potentially costly interest charges, the payment processors also accept some debit or check card payments.

Companies that accept and process credit-debit card tax payments

CompanyPhone numbersWebsite
Link2Gov Corp.(888) PAY1040
(888) 729-1040
Pay1040.com
Businesstaxpayment.com
Official Payments Corp.(888) UPAYTAX
(888) 872-9829
Officialpayments.com
WorldPay US Inc.(888) 9PAYTAX
(888) 972-9829
PayUSATax.com
ValueTaxPayment.com

Although the companies are now accepting debit as well as credit cards, not all cards are accepted for all payment types. The cards that are accepted will be identified when you make your payment.

Also keep in mind that this electronic payment method will cost you more than just your tax bill. Each company has its own fee schedule, with credit card fees ranging from 1.89 percent to 2.35 percent of your tax bill and debit card fees of nearly $4 per transaction.

And if you don't pay off your credit card in full, you'll start racking up interest charges on your account.

Your tax payment and the convenience fee usually will appear separately on your card statement. If you itemize, note the fee amount. The IRS now allows you to count that as a miscellaneous deduction, so you can add this payment to those expenses when you file your 2013 return next year.

Electronic funds withdrawal

Individuals who file via computer, either on their own or with the help of a paid preparer, can use electronic funds withdrawal, or EFW. This basically is the reverse of the direct deposit that the IRS recommends for those getting refunds.

When you get to the end of your computer tax-filing chores and find you owe, EFW will be one of your payment choices. Have your checkbook handy -- not to write a check, but to enter some account numbers that the IRS wants. You'll be asked for your personal account number, what type of account it is (savings or checking), and the financial institution's routing number.

If you don't know which set of numerals is the routing number, check with your bank before you e-file -- especially if you're planning to file (and pay) late on the April deadline day. At 11:50 p.m., there won't be anyone at the bank branch to answer your call for help.

In most instances, electronic funds withdrawal is free. But when you call about the routing number, it wouldn't hurt to confirm that your bank or credit union does indeed allow such transfers at no cost.

One nice thing about EFW is that you can decide exactly when your tax payment comes out of your bank account by scheduling the payment -- as long as it's by the April due date. That means you can get the filing paperwork out of the way early and hold on to your cash until the last minute.

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