Electronic Federal Tax Payment System

You can avoid credit card and possible bank fees by using the federal Electronic Federal Tax Payment System, known as EFTPS. Businesses have been using EFTPS for years to directly transfer various taxes to the IRS. Now the agency is stepping up efforts to get individual taxpayers to use the system.

EFTPS is a free service and is available year-round. Individual taxpayers can make use of EFTPS to pay taxes associated with more than two dozen tax forms, including the family of 1040 forms (estimated and amended returns, too).

You must, however, enroll and get a personal identification number and password before you can use the service. It's a two-step process that involves a confirmation sent through the postal service, so don't wait until the last minute if this e-payment option appeals to you. And, again, check with your bank to see if it charges a transfer fee.

As with electronic funds transfers, EFTPS users can make payments 24 hours a day, seven days a week -- and schedule payments in advance. The online system also lets taxpayers review their last 16 months of tax-payment history and search, print or download the data by date, tax type, amount, tax form and other factors.

In addition to paying an annual tax bill, filers who pay quarterly estimated taxes also can use these e-payment methods.

For more information on electronic tax options, check out the Bankrate feature "Ways to electronically file your return" on ways you can e-file as well as "Getting the most from tax software" for selecting tax software with which you can electronically file your return and pay any tax due.

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