Friday, April 11, 2008

Using Government Websites to Pay Taxes: Practical Tips

At the end of the tax season, it makes sense to think about what you might have learned that could make tax payments easier or cheaper next year.

My lesson this year involved using government websites to manage tax payments: Income tax payments and, more aggravating for me, payments of estimated taxes.

Paying estimated taxes is a hassle, especially when you pay them by check . You have to remember to put them on your calendar for four payments a year. Then you have to actually look at your calendar at weird times. It's easy to overlook the mid-year payments because vacations occur in June and, in September, the kids go back to school and you are depressed about the end of summer. To top it off, the final payment is due in January, after the holidays leave you dazed and broke! Who thinks about income taxes at such times of the year?

This year I used TurboTax to prepare my returns. At the end of the procedure, I caught myself staring morosely at the pile of paper forms TurboTax had generated for paying estimated taxes. How long I had been immobilized? When I finally woke up, well, you know what people do when they recognize they face something that desperately needs to be done. We'll feel better if we surf the net for a few minutes!

Intuit had already emailed me to say that my returns had been electronically filed with the Illinois Department of Revenue. The filing process was easy and made me wonder whether estimated taxes could be electronically filed equally easily. I went to the Department's home and thence to the start of the Estimated Tax Payment Process.

Now I have to apologize. I am going to sound like I am pimping for a tax collector: It took just a few painless minutes to schedule the first electronic 2008 Estimated Tax payment so that it would occur automatically on time and keep my money in its interest-earning checking account as long as possible. Even far better, the remaining three payments were scheduled so they would happen automatically! No fuss, no muss, no more penalties for forgetting the payments when they were due and no more dealing with complex forms that by which you try to escape the penalties!

That success led me to investigate federal resources to e-file or make electronic payments.

I found that there are two different websites for these tasks.

First, learn about regulations, forms and procedures at the regular IRS federal website with its faqs and e-filing pages. (Notice the logo on the federal site is similar to the e-file logo at TurboTax. Are all these tax programs charging you for payment services that state or federal government gives you for free?).

At the IRS site, I eventually found an old news release describing a program for electronic payment of estimated taxes. A link at the bottom of the news release takes you away from the IRS home to a second website, EFTPS Online.

At EFTPS Online, you pay taxes rather than just learn about them. I gathered links to post, but none of them worked when I entered them in the blog. Pages from the website time out pretty quickly, probably for security reasons, so you have to enter the site from the IRS website or from its home portal: https://www.eftps.gov/eftps/home.do. Individuals can pay virtually all their federal taxes from this site. The only problem is that you have to register in advance for EFT payment of estimated taxes and it might take 10-15 days for your account to open.

So here's two frugal tax things you might want to think about for next year:

First, at the federal tax site, you can schedule automatic payments of your federal estimated taxes. You can also pay income taxes. There are no charges for these services.

Second, some (maybe all?) states provide the same free services.

It's well worth investigating these and other services your state and federal websites might provide to help you with your particular tax problems.

Just do so well before you need them! You don't want to be farting around with new websites and new procedures when it's April 14 and you're over the top with stress.

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