9 Things You Need to Know Before Paying Your Tax Bill

The tax season is almost over — and you’re probably excited to finally be done with filling out tax forms, calculating deductions and meeting with your accountant. But, there are a few things you need to know before you can officially kiss the 2016 tax season goodbye.

Here are nine important things to know before you pay your tax bill.

tax deadline

1. When Your Tax Bill Is Due

Your taxes are due by Monday, April 18. Even if you file a tax extension, you’ll still need to pay the amount you think you’ll owe by that deadline — or face penalties. Don’t lowball that estimate, either — the IRS might send it back if it’s unreasonably small.

Related: 5 Immediate Steps to Take If You’re Late on Your Taxes

tax bill

2. Where and How Do You Pay Your Bill

If you can pay your tax bill in full, the IRS strongly recommends using Direct Pay to take care of your bill immediately. Payment is taken directly from your checking or savings account through a secure service, and you’ll get an immediate confirmation number that you can print out for your records.

You can also choose to pay by sending a check or money order through the mail. Make it payable to the United States Treasury and provide your name, address, daytime phone number, Social Security number, tax period and tax form number on the front of your payment.

taxes credit card

3. Credit Card Payments Have Fees

If you choose to pay your tax bill with a credit card, it’s important to realize you’ll be on the hook for processing fees. Depending on the processor you choose, the fee varies from 1.87 percent to 2.25 percent. Fortunately, that fee may be tax deductible.

The other caveat with using your credit card to pay off a large tax bill: Don’t do it if you won’t be able to pay off your credit card statement in full the next month. The interest the IRS charges on a tax bill payment plan is likely much, much lower than your credit card’s interest rate.

taxes debit card

4. Using a Debit Card Is a Much Better Option

Paying your taxes with a debit card is a smarter option, as the fees are small in comparison to credit cards. Depending on the payment processor you choose on the IRS website and how large your payment is, the transaction fee ranges between $2.50 and $3.95.

tax extension

5. An Extension to Pay Is Available

The IRS offers a tax extension period of up to 120 days to pay your tax bill in full. While an extension is free to set up, you’ll still accrue interest and penalties until your debt is paid in full. Call the IRS to request your extension at (800) 829-1040.

tax installment payments

6. Look Into Installment Payments

If your tax bill is more than you can handle right now, you have installment options, too.

First, if you owe $50,000 or less, apply for an online payment agreement. You’ll need to provide your personal information, including your filing status, Social Security number and address from your most recently processed tax return.

Offer in Compromise

7. Consider Negotiating an Offer in Compromise

An offer in compromise with the IRS allows you to settle your tax bill for less than what is owed. This should be a last resort and something worth seeking professional advice on; your financial advisor can help guide you when creating a realistic lump-sum offer, which the IRS will evaluate based on your income, expenses and assets.

You also need to be current with all filing and payment requirements before the IRS will consider an offer in compromise. To see if you are eligible, the IRS offers an Offer in Compromise Pre-Qualifier.

Innocent Spouse Relief

8. Innocent Spouse Relief Is Available

If you have a tax bill stemming from something your spouse or former spouse did, and you had no idea you were signing an erroneous joint tax return, you could have a way out. Some errors that might qualify you for Innocent Spouse Relief include “deductions, credit and property basis” that were incorrectly reported on the joint return and if your spose failed to report income.

The IRS has Form 8857 (Request for Innocent Spouse Relief) to guide you through the process of determining tax liability.

 how to dispute tax bill

9. You Can Dispute Your Tax Bill

If you disagree with the amount of tax the IRS claims you owe, you can dispute it by filing a written protest. Find IRS instructions here. It’s important to have documented records and evidence to support your case before officially disputing your bill.

Keep Reading: 10 Survival Tips When Tax Collectors Call