Is EFTPS right for you?

February 12, 2014 by in category Taxes tagged as , with 0 and 0
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EFTPS stands for the Electronic Federal Tax Payment system. It is a free service provided by the United States Department of the Treasury to allow taxpayers to quickly and easily make tax payments online. Electronic funds transfers from your bank account can be scheduled 24 hours year day, 365 days per year.

Why does EFTPS matter?

The United States tax system is a pay as you go system. Taxes aren’t due on April 15th — they must be paid throughout the year. This is accomplished by either withholding or estimated tax payments. EFTPS provides an easy way to schedule and process these payments. It is a more convenient method than writing checks and eliminates the fee charged for using a credit card.

How does EFTPS work?

Using EFTPS is an easy three-step process. First, you will need to enter your personal information including your Social Security Number or Employer Identification Number, bank account information, and address. NOTE: If you have moved since you last filed taxes, the IRS will continue to use your old address no matter what you enter here unless you have filed a separate change of address form.

Once you’ve created your account, the IRS will mail you a PIN. You can then log on, create a password, and verify your personal information. At that point, you’re ready to schedule payments. It’s a good idea to save a copy of the confirmation you receive when you schedule each payment.

Who must use EFTPS?

Beginning in 2011, virtually all businesses are required to file electronically. This includes both income taxes and withholdings for employees. If you don’t wish to use EFTPS, ask a tax professional if your business fits within one of the narrow exemptions.

Who should use EFTPS?

Many individual taxpayers don’t need to use EFTPS because their employer withholds taxes for them. If you own your own business, are self-employed, or have other non-employee compensation, you may want to consider EFTPS as an easy way to make your quarterly estimated tax payments. Any taxpayer may also use EFTPS to pay any tax owed when they file their return, but a one time payment may not be worth even the minor inconvenience of setting up a EFTPS account.

Who can’t use EFTPS?

EFTPS is a federal payment system. It cannot be used by taxpayers looking to pay their state taxes, although if you owe both federal and state taxes you can use it for the federal portion. It also only accepts payment by electronic funds transfer. Taxpayers wishing to use checks, money orders, credit cards, or other payment methods cannot make the payment using EFTPS.

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