What is the Electronic Federal Tax Payment System(EFTPS)_

What is the Electronic Federal Tax Payment System (EFTPS)?

 

The Electronic Federal Tax Payment System (EFTPS) is a free service provided by the U.S. Department of the Treasury. The EFTPS allows you to view and make all federal tax deposits or payments.

While you can use the EFTPS to make personal federal estimated tax payments, www.irs.gov/directpay is easier and doesn’t require you to have an account. In most cases, questions about the EFTPS come up when discussing payroll.

Your payroll taxes will need to be made via EFTPS. That means you either have an existing EFTPS account or you will need to set one up. If you are working with a payroll software like Gusto, then you’ve likely had one setup for you and should have received a confirmation letter in the mail.

If you have to process back payroll, you will need to set up a EFTPS account ASAP so you can make your payroll tax payments.

You are still responsible for making sure that your payroll tax payments are being made by your payroll provider.

How to Set Up an EFTPS Account

STEP 1:

Enroll online at https://www.eftps.gov

To get started, you will need the following:

  • Taxpayer Identification Number (your Employer Identification Number if you’re enrolling as a business or your Social Security Number if you’re enrolling as an individual).
  • Banking account number and routing number.
  • Address and name as they appear on your IRS tax documents.

Then, simply follow these instructions:

  • Select “Enrollment.”
  • Select “Business,” or “Individual,” or “Federal Agency.”
  • Enter the requested information.
  • Submit.

In seven business days, you will receive your PIN in the mail.

STEP 2:

Get your password.

  • Go to EFTPS.gov and click on “Log In.”
  • Click on “Need a Password.”
  • Enter your EIN or SSN and your PIN.
  • Verify your banking information or your EFTPS enrollment number (which appears on your PIN letter or was given to you when you activated your enrollment via phone) and select “Next.”
  • Create your new Internet password.

STEP 3:

Make your payment.

  • Go to www.eftps.gov and select “Make a Payment.”
  • Select “Log In” again and use your EIN, PIN, and the password you just set.
  • Enter the payment information in the step-by-step screens.
  • When you’re finished, save a copy of the Payment Confirmation page. This contains your EFT Acknowledgment Number that acts as a receipt for your payment instruction.
TL;DR: Managing your EFTPS account is your responsibility. If you need help with back payroll, contact us.
What is the Electronic Federal Tax Payment System(EFTPS)_

Lessons Learned This Tax Season

This season started off to a rocky start with the government shutdown and reduced staff at the IRS. A new set of tax laws and a lack of approval from the IRS on all the forms we needed to file made this year start very, very slowly. This meant we began filing returns a week later than we did in 2018.

Due to the new tax laws, we determined that each of our clients would require more time than usual.. I estimated each client would require around 45 minutes more per return, but the actual number was closer to 1.5 hours. As you can guess, this added time started to create a backlog in early March. Though we hired additional staff to keep all of the returns and communication flowing, it wasn’t enough to cover all of our bases.

For the first time since I started this firm, we had to enforce the drop date of March 15th, which is explained in our engagement letters. Anyone who did not provide us their information before this date would be subject to a tax extension.

Despite its challenges, we survived tax season, we filed all of the extensions needed, and we filed many tax returns. The question then becomes, what have we learned from this?

For me, the first lesson learned is: while I have a plan and a backup plan, that doesn’t mean it is guaranteed to be enough. When planning for tax season, I need to accommodate for factors like the flu, which hit two of our staff during our busiest time of the year.

Second, I need to look at how many additional clients we are willing to bring on during tax season. We have always had some strong rules about the number of clients we would bring on and the type of returns we would process. I enforced several of these rules and walked away from some potential clients that were not a good fit. For other clients, I really wanted to help and bent the rules when I should not have.

Third, we need to set better expectations surrounding communication with our clients. We tend to send out email updates to our email list along of clients along with social media but not everyone is signed up to receive these updates.

Our goal is to always improve and do our best.

Thank you for standing with us through this tax season.

Best,

Toni

What if I Can't Afford to Pay My Taxes_

What if I Can’t Afford to Pay My Taxes?

What happens if you owe taxes and can’t afford to pay them all at once?

First, don’t panic and don’t ignore your taxes.

The IRS has several different options available to those who owe taxes.

The easiest option is a payment plan. If you owe less than $50,000 in taxes, you can apply for a payment plan.

A short-term agreement option is available if you can pay the full amount of back taxes within 120 days. This method does not assess a user fee to set up the plan, though you’ll still be responsible for paying penalties and interest.

An installment agreement is for those who opt to pay the owed amount in a time period longer than 120 days. You will be charged a setup fee and are still responsible for interest and penalties

We recommend applying online to set up your payment plan. TL;DR does not offer to set one up for you since we don’t know what you can afford to pay and what your cash situation is.

You will need the following information to apply online:

  • Name, exactly as it appears on your most recently filed tax return
  • Valid e-mail address
  • Address from most recently filed tax return
  • Date of birth
  • Filing status
  • Your Social Security Number or Individual Tax ID Number (ITIN)
  • To confirm your identity, you will need:
    • financial account number or
    • mobile phone registered in your name or
    • activation code received by postal mail (takes 5 to 10 business days)

You can avoid similar situations by planning in advance and paying your estimated taxes throughout the year.

TL;DR: Don’t panic, set up a payment plan online with the IRS.