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Things to Know About Federal Tax Payments

Will you be making a payment with your federal tax return this year? If so, here is what you need to know about making tax payments correctly.

Never send cash!

If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.

You can pay by phone or online using a credit or debit card whether you file a paper return or electronically.

Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.

If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction. The deduction is subject to the 2 percent limit on Form 1040, Schedule A, Itemized Deductions.

Enclose your payment with your return, but do not staple it to the form.

If you pay by check or money order, make sure it is payable to the “United States Treasury.”
Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.

Complete and include Form 1040-V, Payment Voucher, when sending your payment and tax return to the IRS. This will help the IRS process your payment accurately and efficiently.
For more information, call 800-829-4477 for TeleTax Topic 158, “Ensuring Proper Credit of Payments.” You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov.
Links:
Electronic Payment Options
Form 1040-V, Payment Voucher (PDF 47K)
Form 1040-ES, Estimated Tax for Individuals (PDF 294.9K)
Publication 17, Your Federal Income Tax (PDF 2,072K)

Four Tips Recovery Rebate Credit

Four Tips to Help Taxpayers Avoid Errors On the Recovery Rebate Credit.
Most taxpayers who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. A small number of taxpayers who did not receive the full economic stimulus payment last year may be eligible to claim the Recovery Rebate Credit on their 2008 federal income tax return.

Figuring the Recovery Rebate Credit incorrectly or entering inaccurate information will delay the processing of your tax return and any refund due.Below are the four things every taxpayer should know about this one-time credit, which is related to last year’s Economic Stimulus Payment:

1. You do not have to pay back your Stimulus Payment and the payment is not taxable.

2. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.

3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:Your financial situation changed dramatically from 2007 to 2008.You did not file a 2007 tax return.Your family gained an additional qualifying child in 2008.You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.

4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.

Links:Recovery Rebate Information Center