Tag: EFTPS

Posted on by Jan Roberg

Filing an Extension for Your Personal Taxes

To the finish

Photo by david.ian.roberts on Flickr.com

Are you late filing your taxes this year? You’re not alone. It seems that many people are behind.

 

It’s important to know that an extension gives you an extension of time to file your tax return; it’s not an extension of time to pay your taxes. I think a lot of people want to file extensions because they owe and they think it will give them more time to pay. It doesn’t.

 

The penalty for paying late is ½ of 1% per month. So, let’s say that you owe $10,000 on your taxes. You file an extension, but don’t pay anything towards what you owe. When you actually file and pay in October, instead of owing $1000, you’re going to owe an extra $300. (.005 times $10,000 times 6 months = 300)

 

No matter what, if you’re not ready to file your taxes before April 15th, do file an extension. Although the late payment penalty is ½ of 1% per month, the penalty for not filing (or filing an extension) is 5% per month. That’s ten times as much as the late payment penalty. You don’t want to have to pay that.

 

If you need to file an extension—that is, ask for more time to file your taxes, here are three ways to do it:

 

1. File electronically, using tax software. If you don’t have tax software already, you can use the 1040.com software on this website. Here’s a link: Do Your Own Taxes

 

2. You can mail in a paper copy of the extension form. It’s called a 4868. Here’s a link: IRS Extension Form

 

3. You can make a payment towards your taxes with a credit or a debit card. And that will give you an automatic extension for your taxes. If you just want to make a payment, it’s pretty easy. You’ll start at the IRS website, and chose your payment provider from there. Here’s the link:  IRS Direct Pay

 

So if you can’t get those taxes done before filing time, do get that extension filed.  If you owe the IRS, it could save you some money!

 

 

 

 

 

 

 

Posted on by Jan Roberg

IRS Electronic Deposit Rule Starts January 1st!

Electronic Federal Tax Payment SystemStarting on January 1, 2011, many businesses will be required to make federal tax deposits electronically.  You will no longer have the option of making your federal tax deposits using coupons at the bank.  Businesses that owe minimal amounts and were not subject to tax rules regarding coupons and filing will still be able to mail their payments with their filed tax return.  For example:  941 filers with a deposit liability of under $2,500 can still mail their payments if they want to.

But if you were required to use the coupon system and made deposits at the bank, then you’re going to have to switch over the Electronic Federal Tax Payment System (EFTPS.)  I’ll tell you the truth, I love EFTPS.  I use it myself and I don’t have to.  It’s free and it’s easy.  But in order to use it, you have to sign up.

First, go to their website:  https://www.eftps.gov/eftps/ 

It’s important to sign up before you actually have to make a payment because the signing up process takes some time.  Go ahead and get started today if you’re going to be making payments in January.  Make sure you have all of your information together before you start.  You’ll need all of your standard business information, including EIN number, and of course the bank account and routing number that you’ll be making your tax payments from.  You’ll be sent a PIN number and you’ll be able to start making payments after that.

You don’t even have to be a business to use EFTPS.  An individual is also able to have an EFTPS account.  I recommend that to people who have set up monthly installment agreements with the IRS.  When you make a payment on EFTPS you get confirmation that you made the payment.  That comes in really handy if you’re having an issue with the IRS.

The most important thing to know is that you need to make your payment on EFTPS one day before the payment is due by 8PM.  If you don’t do it by then, your payment will be late.  It’s okay to go in and schedule a payment in advance though.  Let’s say for example that your company owes $3,641 in payroll taxes for December and your payment is due January 17th.  You can go into EFTPS on January 2nd and schedule your payment for the 17th.  You can schedule payments up to 120 days in advance.

One more important piece of information:  When you use EFTPS, the government will not have unlimited access to your checking account.  You initiate all of your payments.  The IRS can’t just go in and grab your money without your say so.