Your tax bill has come and gone with you still owing money because you’re a little strapped for cash. Or maybe you’re considering alternative payment options for your upcoming quarterly estimated tax payment. There’s also noise out of Washington, D.C. that checks will no longer be accepted. Whatever the case, the IRS continues to make credit card payments an option for you to pay your taxes. Here’s what you need to know about using credit cards when considering this option to pay your tax bill.

What you need to know

The IRS has contracted with several credit card merchants to offer credit cards as a method of payment. Why not? Most of us are used to paying for merchandise from groceries to sweaters with our credit card. Ah, but there’s a catch. Stores (called merchants by the credit card companies) pay a fee that is split between the merchant’s credit card bank, the transaction processor, and your credit card company for each transaction. This fee, known as an interchange fee, is not going to be paid by the IRS. You must pay it.

The processing fee

The fee paid by you for paying your tax bill with a credit card is called a convenience fee by the IRS and the credit card processors. The fee is based on a percent of the amount charged from 1.75% to 1.85% with a minimum fee of $2.50 or more. For example, using Pay 1040 Corporation’s credit card transaction fee of 1.75% with a $2.50 minimum fee, and a tax bill of:

• $150.00 would cost you $2.63.
• $1,000.00 would cost you $17.50.

But don’t forget, if you don’t pay your credit card balance in full you must also include the interest cost of the loan you’re taking out courtesy of the credit card company. This incremental interest could be as high as 25%!

The good news. You can use any of the four major credit cards to pay your taxes: Visa, Mastercard, American Express, or Discover. In addition, you can earn miles and points if you use a rewards credit card.

The bad news. This payment method adds an expense to your tax bill. Plus, you are limited to the number of payments you can make using this method to two per year.

Better alternatives

Remember, if you are considering paying your taxes with your credit card and you carry a balance from month to month you are really taking out a loan to pay your taxes. Using this perspective:

Get a better loan somewhere else. Perhaps a short-term loan from a bank or credit union makes more sense. Consider borrowing the money from a family member. If you create the proper loan documentation, it might be a good way for that family member to earn a nice interest rate.

Consider borrowing from Uncle Sam. There are installment payment plans available for qualified taxpayers. While there is a set up fee, the monthly interest charged by the government is typically much lower than that charged by credit card companies.

Use planning to your advantage. Create a plan to pay for next year’s tax obligation throughout the year to avoid a repeat of needing funds to pay your tax bill. This may cause some hardship, but saving a little bit more each week through payroll withholdings is usually more manageable for most of us versus a big tax bite in April.

While paying your tax bill with a credit card is often one of the most expensive ways to pay your taxes, it’s vastly less expensive than paying high penalties and interest on unpaid taxes.

With the pending tariffs and turbulent markets, the last thing on most taxpayers minds is tax planning. But in the midst of all this turmoil is the potential for tax saving activity available to those willing to plan accordingly. Here is what you need to know.

In a turbulent market, transferring securities during a dip in the market can save a bunch in taxes. So if part of your retirement plan is to balance your funds between pre-tax and after-tax obligations, now might be time to act.

• Recall that traditional IRA accounts, 401(k) and similar accounts must pay income tax upon fund withdrawal. Whereas Roth IRA and Roth 401(k) accounts use pre-tax dollars and there is no tax on future earnings as long as the funds are in the account for five years.
• There’s no limit to the amount you can convert from a traditional IRA, or 401(k) into a Roth IRA.
• Remember that unless Congress acts, the tax rates are going up next year.
• And the old ability to reconvert stocks from a Roth back into a traditional IRA or 401(k) is no longer possible.

So a set of stocks once worth $100,000 but are now valued at $70,000 can be converted now with $30,000 less in taxable income. If you are planning on holding the stock and you believe it will recover in the long run, you have a tax savings opportunity. Plus the future appreciation will no longer be taxed!

This tax savings idea is not for everyone. The stocks could decline further, creating an opportunity cost. So if considering this tax tip, it should be managed in conjunction with the appropriate planning and investment expertise. But if you were considering a balance of your retirement funds between taxable and tax-free sources, you may have a tax planning opportunity at the door step.

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. This publication includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this web page. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does Willis & Jurasek have any control over, or responsibility for, the content of any such Websites.
All rights reserved.

For some reason, some believe it’s better to receive than to give when it comes to filing taxes. While that may help your savings account, it’s not always a great idea. Here’s why.

You are the bank. You are giving the IRS an interest-free loan. And now with higher interest rates, you could be giving away a lot of earned interest on that overpayment to the government.

Debt costs a lot. Consider lowering your withholdings throughout the year and using the extra money to pay down your debt. Even better, the benefit of paying down a home loan in the early years of a mortgage can yield tremendous savings!

IRS identity theft is common. The longer you have your money in the hands of the IRS, the higher the chance some unsavory character is going to try to get it for themselves. Should this happen to you, the IRS will fix the problem, but it is typically taking two years according to a recent taxpayer advocate report. In the meantime, there is paperwork and hurdles to overcome while your refund is delayed.

You could fund something else. Instead of money being parked at the IRS, you could be investing in your retirement or funding a Health Savings Account to pay for medical expenses in pre-tax dollars! So in addition to saving money, you could also be lowering your tax bill!

So you received a refund. Congratulations. Now you have an opportunity to make tax tips work for you.

Before you file away your tax return and all its related records, now is the time to make a final review of the material. This can be in either paper or digital form as long as you know where it is, it’s securely stored, and you feel it will meet the requirements of substantiation. Here are some tips:

The checklist

Use this checklist to help your record keeping. At a minimum, your records should include the following;

• A copy of your signed tax return and all supporting documents sent with your tax filing
• Copies of any worksheets that support your tax filing
• Canceled checks of deducted items
• Record of digital payment(s) and timing if using electronic payment systems
• Receipts supporting deducted items
• Bank statements
• Investment statements
• Form W-2s
• Form 1099s (all form types)
• Form 1095s (to support having valid health insurance)
• Mortgage statements (including annual interest paid and Form 1098)
• Form K-1 for partnerships, LLCs, or S Corporations
• Credit card statements
• Copies of any major purchases or sales (example: home closing documentation)
• Mileage logs for business, charitable and medical transportation
• Proper documentation for business meals and cell phone use
• Receipts for any charitable donations (both cash and non-cash donations)
• Support for all your itemized deductions
• Child care receipts and reporting
• Educational expenses
• Substantiation for value of large donations of property
• Proof of fair market value for any inherited items of value

Capital improvements

Now is also a good time to review your capital improvement files. Capital improvements are payments made to improve the value of your home, secondary residence, or other high value property/equipment. These records are needed to support your calculation of value and gain/loss when you sell your property. Consider creating a spreadsheet that recaps each of these expenditures.

When to toss

Don’t toss old records too soon. The typical rule is to retain federal tax records for as long as they may be needed. This is usually the later of 3 years after the filing due date or when you actually file your tax return. But be careful, state rules can differ and if your income is understated by more than 25%, the look back timeframe for a potential audit increases to 6 years. Finally, remember to keep records of fixed assets as long as you own them plus three years.

Most of us go through life without being concerned with, or ever checking on, our Social Security records. We assume the money deducted each payday and an equal amount paid in by our employer is applied properly to this valuable retirement benefit.

Ignoring is problematic

The Social Security Administration (SSA) is being inundated with fraudulent W-2s and 1099s, and doesn’t have the ability to catch them all. This is creating a high degree of reporting errors, even when a tax return is not filed by identity thieves! In addition, the SSA and your employer occasionally have their own errors. Unfortunately, the only way these problems are caught is if YOU catch them. Waiting until retirement may be too late to correct an error made 10 or 20 years back. Common problems created by these errors and their impact are:

Incorrect amounts. If the SSA does not receive a W-2 wage statement from an employer, you will not see credit for these earnings. Since your Social Security retirement check amount averages your lifetime earnings, if you have earnings that are missing, your retirement check will be permanently lower!

Missing the correct length of time. In addition to receiving credit for earnings, you also need to work 40 quarters or 10 years to be fully eligible for retirement benefits. These missing earnings reports reduce your number of working quarters. Mess up here and you may not qualify for benefits at all!

The three-year correction time limit. Per the SSA, an earnings record can be corrected at any time up to three years, three months, and 15 days after the year in which the wages were paid or the self-employment income was derived. While there are exceptions for fraud and obvious clerical errors, why risk the hassle by not finding errors and fixing them when they happen?

Action to take

Thankfully, it is now easier to confirm the accuracy of your account by going to www.ssa.gov and using the SSA’s online tool that allows you to review your historic earnings statements.

To use the tool, you will need to go through a signup process that includes many safety measures to ensure your identity is protected. This is usually done using a tool called ID.me and will require a valid ID and a way to take a photo of yourself and your ID.

Once you log in, review your statement for any errors. If you see an error, takes steps to immediately correct it. You can do this by contacting the SSA:

Telephone:

1.800.772.1213

By mail:

Social Security Administration Office of Earnings Operations

PO Box 33026

Baltimore, MD 21290-3026

Since you may have just completed last year’s tax filing, now is a great time to get in the habit of reviewing your Social Security records. It is your future.

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. This publication includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this web page. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does Willis & Jurasek have any control over, or responsibility for, the content of any such Websites.
All rights reserved.

Both your individual tax return AND first quarter estimated tax payment are due. Here is what you need to know.

First quarter due date: Tuesday, April 15, 2025

The estimated tax payment rule

You are required to withhold or prepay throughout the 2025 tax year at least 90 percent of your 2024 total tax bill, or 100 percent of your 2025 federal tax bill.* A quick look at your 2024 tax return and a projection of your 2025 tax obligation can help determine if a quarterly payment might be necessary in addition to what is being withheld from any paychecks.

Things to consider

• Underpayment penalty. If you do not have proper tax withholdings throughout the year, you could be subject to an underpayment penalty. A quick payment at the end of the year may not be enough to avoid the penalty.
• W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 wage withholdings to make up the difference.
• Self-employment taxes. In addition to paying income taxes, self-employed workers must also pay Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter to pay your estimated taxes.
• Use your refund. An alternative option to pay your first quarter estimated tax is to apply some or all of your tax refund.
• Pay more in the first quarter. By paying a little more than necessary in the first quarter, you can be in a position to adjust future estimated tax payments downward later this year if your tax obligation trends lower than you originally thought.
• Not sure if you need to make a quarterly payment? Take a quick look at your tax return to see the amount of tax you paid last year. Divide this amount by the number of paychecks you receive each year and compare to your most recent paycheck. Is enough being withheld from each paycheck? Talk to your employer if you decide you need to adjust your withholdings to cover next year’s tax bill.

*If your income is more than $150,000 ($75,000 if married filing separate), you must pay 110 percent of your 2024 tax obligation to avoid an underpayment penalty on your 2025 tax return.

As the payment alternatives continue to evolve in the economy, so too are the payment options available to you to pay your tax bill. Here is what’s available to you this tax filing season along with each option’s related costs.

Various payment methods to pay taxes

1. Electronic funds withdrawal. This comes out of the checking or savings account noted on your 1040 tax return. There is no charge for this service.

2. Send in a check. Use an IRS voucher for this. Write your check out to the U.S. Treasury and send it via certified mail.

3. Pay with a credit card. The IRS provides two vendors (called merchant banks) for this service: Pay1040 and ACI Payments. There is an interchange rate charged to you ranging from 1.75% to 1.85% with a minimum fee of $2.50.

4. Pay with a debit card. Again there are various services that provide this with a fee of $2.10 to $2.15.

5. Pay by digital wallet or cash. This usually involves a $1.50 fee

6. Drop off cash payment, including to one of 60,000 locations. Yes, you can still bring in your tax payment to designated locations and pay in cash. If this is the option you take, you will need an appointment. Details can be found here.

Available payment suppliers

Debit/Credit: Visa, Mastercard, Discover, American Express, Star, Pulse, NCYE, ACCEL, AFFN, Cirrus, Interlink, Jeanie, Shazam, Maestro

Digital Wallet: Click to Pay, PayPal, Venmo

Cash: Vanilla Direct

Interesting notes

• If you have an online IRS account, you can make payments within this secure setting.
• IRS offices still allow for walk up payments in cash. Just make sure you have an appointment and follow online instructions.
• There are limits to the number of credit card transactions you can make in a year. You also need to get approvals if you think payments may exceed $100,000.
• If you find you cannot pay your taxes, there are also installment payment plans.

Wondering why your tax return is not finished? The delay can often come from one or two items that were overlooked and are needed to complete your tax return. Here are some of the most common:

Missing statements. This includes all W-2s and 1099s, including any related to gambling winnings, income, interest, and mutual funds.

Details on basis. If you sell stock, a house or other property, you need to provide the date you purchased the item, along with the cost and condition of the item when purchased. You also need to ensure that all the costs are included. In the case of stock sales, this includes items like broker fees and surrender charges. And if you are reinvesting dividends, the cost of all those repurchases are also part of your basis in the stock!

Dependent conflict. You claim a dependent on your tax return, but your child claimed themselves as a dependent or an ex-spouse has already filed a tax return with the same dependent’s Social Security number.

Mismatched names. You recently got married, but did not change your name with the Social Security Administration.

Digital asset details. Just like details required when you sell other property, you will need to provide the details on ALL transactions related to digital currency and other digital assets. Also remember to acknowledge whether you own any digital assets. This simple omission can hold up filing your tax return.

Missing documentation for deductions. Common among these are: charitable contribution statements, medical expense documents, childcare forms, property tax forms, home sales records, pension statements, and retirement forms.

Waiting for your review. You need to sign your tax return and/or return a signed Form 8879 saying your return is ready to file electronically.

Receiving documentation late. The closer to the April filing deadline your documents are received, the greater the potential back log of tax return processing you’ll encounter. When it comes to tax return processing (and receiving a refund), the early bird not only gets the worm, it also gets the worm faster!

If you’re requested to provide a missing item, the sooner you can provide the information the better. It always takes a bit more time to review your return after setting it aside for a missing document or piece of information.