How To Pay Income Tax Online- A Guide

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How To Pay Income Tax Online

Paying your taxes can be such a hustle. You have to get it right or risk being liable for tax fraud. Before the internet was mainstream, there were many complex payment methods. They include money orders, Same-day Wire, and cash.

The internet has made payments easier, more convenient, and more secure. You can file your returns from the comfort of your home. Gone are the days when you had to cue to make payments.

While paying your taxes is easy, how can you do it? To answer the question, let us look at:

How To Pay Income Tax Online

The Internal Revenue Service makes it easier to pay your taxes online. Just follow these steps.

Step 1: Connect your phone or computer to a secure network

You need internet access to make payments online. You should not make your payments over a public network. You do not know who can see or access your information, so choose a safer private network.

Step 2: Go to irs.gov on your browser.

Type irs.gov on your browser to open the official IRS website. It is a secure website where you should make your payments online.

Step 3: Open Pay

Go to the navigation bar. Click on the ‘Pay’ option. You will see the Pay option between the ‘File’ and ‘Refunds’ tile.

Step 4: Select your preferred option

There are three choices here. Select the Pay by Debit Card, Credit Card, or Digital Wallet.

Step 5: Ensure that you have a supported card.

Before you make your payment, ensure that your card is supported. Not all cards are supported. The following payment options are accepted. ; PayPal, Click to Pay; Pay with Cash, Discover, American Express, STAR Visa, Pulse, and NYCE.

Step 6: Select the appropriate payment option

There are three payment options. These are ACI payments, Pay1040 and PayUSAtax.

Step 7: Follow the prompts to complete the payment

Follow the simple prompts on the website to complete your payment.

Why Do We Pay Taxes?

Taxes are important for any economy. Everyone has a moral and legal duty to pay taxes. These deductions are useful in the following ways:

When the government collects taxes, it may offer essential public services. Water, electricity, public transportation, and other amenities are examples of public services.

The government spends tax dollars to maintain public service infrastructure. It covers water systems, road repairs, and bus and train maintenance, among other things. Taxes are vital because they enable the government to deliver needed services.

Wealth transfer is one of the most important functions of taxes in the economy. The role is debatable, given that the wealthiest people pay the lowest income tax rates.

How can taxes help to lower economic disparities? Many successful economies use a progressive tax system. 

It is a process that guarantees that you pay taxes based on your earnings. The wealthiest people pay the most taxes.

Taxes allow the government to care for those who are less fortunate or endangered. The government can offer food stamps and low-cost housing to the poor folk. It also helps to fund unemployment benefits for those who are unemployed.

The government can manage public schools and provide public education by collecting taxes. The government funds these schools. The government gathers this money through taxes.

When the government collects money, government schools may support their curriculum and hire employees. 

Schools get pressured to remove activities like athletics and the arts due to a lack of resources, which is bad for kids.

The government pays down the national debt via taxes. It occurs when a country’s trade balance with another is unfavorable. 

It results in a trade imbalance for the country. Taxes enable the government to repay its foreign debt.

Taxes support the local and federal governments’ funding of basic health care services. To survive, all government hospitals rely on taxes. Taxes allow the government to buy needed items, supply hospitals and even pay employees.

The government uses the funds to maintain the infrastructure that enables these health facilities to operate. As a result, taxes are critical for health care.

Different Tax Structures

Different sorts of tax rates exist. These are grouped based on their structure and the earnings of those responsible for them. These are the taxes:

Progressive Tax

It’s a tax rate that rises in proportion to your earnings. The taxes get divided into brackets. Lower-income people pay a small percentage of their income in taxes. High-income earners pay a higher percentage of their income in taxes.

Regressive Tax

Lower-income workers pay a higher percentage of their earnings in taxes, known as regressive taxes. Most consumer items have these taxes on them.

Flat taxation

These are taxes that are proportional to each individual’s wages. It includes taxes such as sales tax, which is paid at a fixed rate regardless of sales volume.

Types Of Tax Fraud

Tax fraud or tax evasion is an illegal act of not paying or underpaying taxes. It is a criminal act in many countries. 

Tax fraud is one of the most common white-collar crimes. Everyone has a legal responsibility to pay their taxes.

A common type of fraud is intentionally not paying taxes. It involves ignoring tax payment deadlines. It is normally due to negligence on the payer’s part rather than a malicious act.

If you fail to pay your taxes when they are due, you risk getting a penalty. To avoid the drama, set reminders to pay taxes monthly.

Did you know that failing to file your annual tax returns is tax fraud? You must declare your tax amount and income to the Internal Revenue Service. It shows that you are tax compliant. 

Tax returns are important in many ways aside from showing compliance. It allows people and business to plan their tax payments. You can go through your income or income statements to plan how to pay your taxes.

Tax returns help you know whether you are overpaying your taxes. You can see whether your income fell during two tax periods by looking through the returns.

It is considered fraud to make false tax claims to the IRS. What is a false tax claim? It involves lying on your tax return to reduce the taxes you have to pay.

Faking tax returns is illegal and could land you serious jail time. You can also get stiff penalties depending on the extent of the fraud. You must always keep an honest record of returns.

A common type of tax fraud is employee underreporting. Some employers are guilty of being dishonest with the number of people they employ. It could be because these workers are undocumented or underage.

Employers must pay a payroll tax every time they issue wages or salaries. These payments mostly go to welfare and health programs. They avoid paying these taxes by failing to report the number of workers.

Refund fraud occurs due to false tax claims. When you make a false return, you might get refunded some of your taxes. 

The fraud person normally fakes the number of children and income levels or even includes fake deductions.

Businesses that do refund fraud add fake expenses to their income statements. People who engage in refund fraud take advantage of the system. They steal from the IRS.

Employment leasing is tax fraud that involves employers. It is similar to payroll fraud. The difference between the two is that employers outsource their payroll duties. It happens through a middle man.

Outsourcing is not a fraud. Fraud happens when the middleman fails to remit the payroll taxes to the IRS. Many outsourcing firms are guilty of evading taxes in this way.

Did you know that you have to file reports if you have assets in a foreign bank? There are bodies such as the Foreign Banks and Financial Accounts Reports. It has to ensure that you update the IRS on your foreign assets.

These assets may be in a different tax regimen, but you need to report them. Reporting is not necessary if you have less than 10000 dollars in the accounts.

Cashing out is a common form of tax fraud. It happens when employees pay their employers in cash. 

Therefore, they can underreport the number of workers or fake contributions to welfare accounts. Workers can also evade taxes when they receive cash payments.

Paying employees in cash enables employees to commit fraud. Workers are encouraged to accept payment from their banks and not in cash.

Conclusion

Every American citizen should know how to pay income tax online as it is faster and more convenient. Before the internet, there were several difficult payment options. Money orders, Same-day Wire, and cash are among them.

The internet has made payments easier, more convenient, and more secure. You may submit your taxes from the convenience of your own home. The days of having to cue to make payments are long gone.

The internet is flexible and helpful. Paying taxes online is cheaper. There is also a higher limit on the amounts you can transfer,