I just don’t seem to be writing as many checks as I used to. And I don’t want the panic of being on vacation with no checkbook when my estimated taxes are due. The solution that works for me is to schedule my estimated tax payments to come directly from my bank account on the appropriate dates. No more checks getting lost in the mail or visits to the post office if the payment needs to be sent by certified mail. Now I just have to be sure that come the due dates there are sufficient funds in my account. These are not the only way to pay taxes, but they are free and easy ways to schedule payments in advance of the due date.
The IRS makes it easy to do this.
You can enroll in the Electronic Federal Tax Payment System (EFTPS) by going to: https://www.eftps.gov/eftps/. Once you enroll as an individual, the IRS sends a PIN in about a week. You can then schedule your estimated tax payments for the year. Note, however, that payments must be scheduled by 8PM on the date before the due date to be timely paid. When you register you designate the account from which payments will be debited. When you’re ready you log in, select Form 1040 as the appropriate form and on the next screen choose “Estimated 1040ES”. Going to the next screen will allow you to schedule the dates and amounts for up to four estimated tax payments. This service has recently been updated so that you can:
- Receive your confirmation by email.
- Verify the bank account that will be used when making a payment
- Change the bank account used for a payment
- Self-select your PIN when creating an additional enrollment
- Terminate an enrollment you are no longer using
You can also make estimated tax payment without a registration by going to: https://www.irs.gov/payments/direct-pay. If you need to make a payment in a hurry, this is your best option. To use Direct Pay, you’ll need to provide your tax information, verify your identity, enter your payment information, provide an electronic signature, and review and record your online confirmation. The IRS supposedly does not retain your banking information once the payment is received. This site is available 24/7 and payments can be scheduled up to thirty days in advance.
There are no fees for either service. I’ve never tried Direct Pay because I like the convenience of scheduling all the payments for the year at one time.
I think New Jersey makes scheduling payments even easier. You can schedule estimated tax payments online at:
https://www1.state.nj.us/TYTR_RevTaxPortal/jsp/IndTaxLoginJsp.jsp (type carefully, cut and paste, or do a Google search for NJ Income Tax-Estimated Payments and find the “online” link).
After entering you Social Security Number and date of birth, the fourth bullet on the next screen (Estimated Payments-Schedule/Submit NJ-1040-ES) takes you to estimated tax payments. The first bullet on the next screen allows you to schedule multiple payments by E-check. Be sure the return type is “Resident Return” and the return year is correct. The payment due January 2021, for example, is still for the 2020 tax year. The next screen allows you to schedule your payments. When you submit the payment schedule, the next screen will ask you to enter your contact information and then your bank information which you then reconfirm.
While writing this I had a brief senior moment and couldn’t remember what NJ payments I had scheduled for 2019. All is not lost; you can see payments already made and scheduled after you log in with your Social Security Number and date of birth by clicking on View/Modify/Cancel Payments on the next screen. Whew!
This article contributed by Lois S. Fried, CPA, CFE, CVA, ABV.