OLT Tax Corner ~ Payments

Payments FAQ
1.	If I owe on my federal return, do I wait for the IRS to contact me, or do I go ahead and send in the payment voucher with the amount owed?
2.	What is Form 1040V?
3.	How do I know if I need Form 1040V?
4.	Where can I find Form 1040V and it's instructions?
5.	Can I make my estimated tax payments using a credit card?
6.	After completing my tax return this year, I discovered I actually owe taxes. I do not have the money to pay it all at once. Is there any way I could set up a payment plan with the IRS?

If I owe on my federal return, do I wait for the IRS to contact me, or do I go ahead and send in the payment voucher with the amount owed?	Top
Do not wait for the IRS to contact you. If you owe taxes, your payment needs to be made by April 15 in order to avoid penalties. If you have not made your payment by April 15, penalties will be assessed as necessary by the IRS.
What is Form 1040V?	Top
Form 1040V is a payment voucher that you need to send in with any check or money order for any balance due on your tax return.
How do I know if I need Form 1040V?	Top
If you have a balance due on your tax return and you owe taxes to the IRS, you should use a Form 1040V to make your payment.
Where can I find Form 1040V and it's instructions?	Top
On the IRS wesite at http://www.irs.gov/pub/irs-pdf/f1040v.pdf . Your tax provider should also be able to provide you with one.
Can I make my estimated tax payments using a credit card?	Top
E-Payments can be used to pay your quarterly estimated taxes for 2005. Taxpayers can make credit card payments whether they file electronically or file a paper return. Credit card payments can be submitted via the tax software when filing electronically. Credit card payments can also be made over the telephone and by filing on line. In 2004, more than 950,000 taxpayers paid by credit card, an increase of 70 percent over the prior year. The IRS does not set or collect any type of fee for credit card payments, but the private sector companies the IRS has authorized to process these payments do charge convenience fees. The tax payment sent to the U.S. Treasury and the convenience fee are listed separately on the cardholder’s credit card statement. Some tax software developers offer integrated e-file and e-pay combinations for those who choose to use a credit card to pay a balance due. The software accepts both the electronic tax return and the credit card information. Subsequently, the tax return and tax payment data are forwarded to the IRS and the credit card data is forwarded to the payment processor. For the 2005 filing season, the IRS has awarded contracts to two companies to accept credit card charges from both electronic and paper filers. Each company has its own convenience fee schedule, and each offers both phone and Internet payment services. The two companies are: · Official Payments Corporation, 1-800 2PAY-TAX (1-800-272-9829), 1-877-754-4413 (Customer Service), and · Link2Gov Corporation, 1-888-PAY-1040 (1-888-729-1040), 1-888-658-5465 (Customer Service). Anyone may use these services to charge taxes to an American Express Card, Discover Card, MasterCard or VISA account. VISA joined the IRS credit card program in March 2002.
After completing my tax return this year, I discovered I actually owe taxes. I do not have the money to pay it all at once. Is there any way I could set up a payment plan with the IRS?	Top
Yes. If you cannot pay the full amount due as shown on your return, you can ask to make monthly installment payments. However, you will be charged a one time user fee of $43.00, as well as interest on any tax not paid by its due date, and you can be charged a late payment penalty unless you can show reasonable cause for not paying the tax by April 15, even if your request to pay in installments is granted. Before requesting an installment agreement, you should consider less costly alternatives such as a bank loan. To request an installment agreement, send Form 9465, Installment Agreement Request, with your return or call (800) 829-1040. You should receive a response within 30 days. For more details on installment payments, refer to Tax Topic 202, What to do if You Can't Pay Your Tax, or Publication 594, Understanding the Collection Process.