Best practices for paying taxes and avoiding penalties

Getting mail is fun, except when it’s from the IRS. No one wants to be surprised with unexpected tax penalties. Paying on time and choosing the right payment method helps you stay compliant and keep more of your money.

With new IRS procedures and advancements in technology, taxpayers have more efficient options to manage tax obligations. Consider these best practices:

Use Electronic Payment Methods

The IRS strongly encourages electronic payments, offering:

• Faster Processing: Payments go directly to the IRS without waiting for mail delivery.
• Security: Electronic payments reduce the risk of lost, delayed, or stolen mail.
• Instant Confirmation: You receive immediate proof of payment, eliminating uncertainty.

Services like IRS Direct Pay let you pay your annual tax liability, extension payment, or your quarterly estimated tax payments directly from your bank account, and the Electronic Federal Tax Payment System (EFTPS) allows you to schedule payments in advance. These systems maintain a record of your payments, allowing you to verify transactions and maintain accurate records. Both are free, secure, and easy to use.

If Mailing, Use Certified Mail with Return Receipt

For those who prefer or need to send physical tax documents, using U.S. Postal Service Certified Mail with a return receipt is a smart move. This method provides:

• Proof of Mailing: A Certificate of Mailing serves as evidence that you mailed your tax return on a specific date, which is crucial if the IRS questions the timeliness of your submission.
• Delivery Confirmation: A return receipt confirms that the IRS received your documents, providing peace of mind and a record for your files.

Secure Tax Filing and Payment Strategies

Relying on regular mail without tracking is risky. If a tax return isn’t received, it may be considered delinquent, leading to penalties. Certified Mail or electronic filing provide confirmation of receipt and/or filing. E-filing is faster, more accurate, and delivers instant receipt confirmation.

To avoid penalties, stay aware of deadlines. The standard tax filing deadline is April 15, but taxpayers in areas impacted by Hurricane Helene have until May 1. If needed, you may request an extension to October 15, but remember, taxes owed are still due by the original deadline to avoid interest charges.

Maintain records of all tax filings, payment confirmations, and IRS correspondence. These records can help solve discrepancies or examinations.

We Can Help

Electronic payment and filing streamline tax management, improving efficiency, accuracy, and security. While traditional mailing remains an option, it carries risks and potential delays. Leveraging IRS tools minimizes tax season stress and helps you stay compliant with federal and state laws. Contact a member of our team today for help with your tax filing.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.