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Tax question: Best way to pay large sum to IRS?
Old 04-03-2014, 06:24 PM   #1
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Tax question: Best way to pay large sum to IRS?

I exercised some ISO's last year, which is going to result in me owing the IRS a fairly substantial sum for AMT this year. Far more than I've ever had to pay them in the past.

I'm also forced to file actual papers because I did an 83(b) election, and my understanding is, when you file one of those, you have to file actual paperwork as there's no electronic filing when you do an 83(b).

I don't feel comfortable transferring the sum in question into my checking account and writing a personal check that's going to travel through the mail. I also do not want to do a credit card payment for that large an amount because of the fees, and none of my card limits are high enough to cover it anyway.

I hit the IRS' site for electronic payments, but it's kind of confusing. Anybody here have experience paying a large amount to the IRS, especially if a paper return filing is involved?

Thanks!
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Old 04-03-2014, 06:31 PM   #2
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Originally Posted by LoneAspen View Post
I exercised some ISO's last year, which is going to result in me owing the IRS a fairly substantial sum for AMT this year. Far more than I've ever had to pay them in the past.

I'm also forced to file actual papers because I did an 83(b) election, and my understanding is, when you file one of those, you have to file actual paperwork as there's no electronic filing when you do an 83(b).

I don't feel comfortable transferring the sum in question into my checking account and writing a personal check that's going to travel through the mail. I also do not want to do a credit card payment for that large an amount because of the fees, and none of my card limits are high enough to cover it anyway.

I hit the IRS' site for electronic payments, but it's kind of confusing. Anybody here have experience paying a large amount to the IRS, especially if a paper return filing is involved?

Thanks!
Don't know what ya mean by "large."

I had to sent them twenty-something kilobux one year due to some one-time circumstances. This was back before I started filing electronically. I just wrote the check, attached it and mailed it in.

Personally, I don't think large personal checks in the mail are a worrisome issue. But maybe you're talking about some real dough.........
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Old 04-03-2014, 06:40 PM   #3
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I just sent a check drawn on my checking account. I did not even mail it registered nor return receipt requested. Why bother to draw attention to the envelope?
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Old 04-03-2014, 06:41 PM   #4
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Anybody here have experience paying a large amount to the IRS, especially if a paper return filing is involved?

Thanks!
Have you looked into doing a wire transfer from your financial institution?
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Old 04-03-2014, 06:42 PM   #5
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I would just use EFTPS.com. That is how I make estimated payments four times a year, and a smaller payment when filing.

A paper check would also be OK. You could mail the check using certified mail.
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Old 04-03-2014, 06:45 PM   #6
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I also owe a big amount this year and will be mailing in a personal check.
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Old 04-03-2014, 06:45 PM   #7
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Use Certified Mail Return Receipt Requested from the post office.

They handle large checks all the time:

Pay by Check or Money Order
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Old 04-03-2014, 07:02 PM   #8
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Use Certified Mail Return Receipt Requested from the post office.

They handle large checks all the time:

Pay by Check or Money Order
In the process of settling my mothers estate I sent checks worth over 300k by certified mail, return reciept requested. You can check the status of the item on the web. If you use a large manilla envelope to contain the return then no one can see that there is a check inside.
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Old 04-03-2014, 07:28 PM   #9
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The amount would be several tens of thousands, but not quite six figures.

The main reason I don't feel comfortable with personal check is...the money would have to sit in my checking account while I waited for the IRS to cash the check. I don't normally keep anything extra in my checking account over and above what I need to pay monthly bills.

Although I've never been hacked or had money stolen from my checking account (ATM fraud, debit card fraud, etc) it makes me nervous having that much in a checking account while I wait for a check to clear.

I'd feel safer wiring money from my brokerage account to the IRS, but I couldn't find a clear option for doing that on the IRS web site. I saw the EFTPS system mentioned, but my understanding is you give them account information of the source account, and they PULL the money from it. I'd rather SEND them the money like a normal wire transfer.

Maybe I'm not understanding the EFTPS system correctly...
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Old 04-03-2014, 07:34 PM   #10
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The amount would be several tens of thousands, but not quite six figures.

The main reason I don't feel comfortable with personal check is...the money would have to sit in my checking account while I waited for the IRS to cash the check. I don't normally keep anything extra in my checking account over and above what I need to pay monthly bills.

Although I've never been hacked or had money stolen from my checking account (ATM fraud, debit card fraud, etc) it makes me nervous having that much in a checking account while I wait for a check to clear.

I'd feel safer wiring money from my brokerage account to the IRS, but I couldn't find a clear option for doing that on the IRS web site. I saw the EFTPS system mentioned, but my understanding is you give them account information of the source account, and they PULL the money from it. I'd rather SEND them the money like a normal wire transfer.

Maybe I'm not understanding the EFTPS system correctly...
does your brokerage account have a money market fund that allows you to write checks? Write the check on that account. (since it will be above the minimum limit). No need to move to regular checking account.
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Old 04-03-2014, 07:35 PM   #11
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Originally Posted by LoneAspen View Post
The amount would be several tens of thousands, but not quite six figures.

The main reason I don't feel comfortable with personal check is...the money would have to sit in my checking account while I waited for the IRS to cash the check. I don't normally keep anything extra in my checking account over and above what I need to pay monthly bills.

Although I've never been hacked or had money stolen from my checking account (ATM fraud, debit card fraud, etc) it makes me nervous having that much in a checking account while I wait for a check to clear.

I'd feel safer wiring money from my brokerage account to the IRS, but I couldn't find a clear option for doing that on the IRS web site. I saw the EFTPS system mentioned, but my understanding is you give them account information of the source account, and they PULL the money from it. I'd rather SEND them the money like a normal wire transfer.

Maybe I'm not understanding the EFTPS system correctly...
Yes, the EFTPS does an auto pull based on what you schedule.

If you think the IRS can't come after you and find all your funds in all kinds of accounts and pull them without telling you if you owe them money and won't pay....think again. I saw that happen to a friend with my own two eyes.
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Old 04-03-2014, 07:51 PM   #12
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While I've never sent them a five-figure check I'd think it happens all the time. There is a paper trail in the check itself so if it did happen to get stolen you have the bank's copy of the negotiated check and the post office's return receipt paperwork to show that you did in fact send the check. That is your proof that you did send the check. If it did get stolen and cashed the Treasury would complete an affidavit of forgery for your bank, the bank would reimburse you, and you send another check (or other form of payment). Whoever accepted the check would eat the loss.

And if anyone was dumb enough to accept a forged endorsement check made out to "United States Treasury" they deserve to take the loss on it.

All of which would be a headache to deal with of course.

I'm puzzled why you feel that having the money in a checking account is any less secure than any other type of financial institutional account.
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Old 04-03-2014, 07:59 PM   #13
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I used to send six and seven figure checks for estimated taxes by certified mail (at the last minute of course) and never had a problem. Now that I'm FIRE'd, I have more control over my taxable income and such lunacy is not necessary.
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Old 04-03-2014, 08:02 PM   #14
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There's always a but. . . But EFTPS does not give the IRS the authority to pull whatever they want. You have to trigger the transfer. My understanding is that the transfer is a push rather than a pull. EFTPS pulls from your account per your instruction, and forwards the money to the IRS.

Unless the enrollment process has changed, there is probably not enough time to enroll in EFTPS and make a payment by the deadline, so this discussion might be academic.

Anyway, if the IRS wants your money they will get it.

Do you have electronic bill pay as a feature of your checking account?
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Old 04-03-2014, 08:07 PM   #15
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And if anyone was dumb enough to accept a forged endorsement check made out to "United States Treasury" they deserve to take the loss on it.
Exactly what I thought. I can hear the teller's thoughts: "Until a few minutes ago I didn't realize the Treasury had an account with us.".
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Old 04-03-2014, 11:16 PM   #16
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Originally Posted by LoneAspen View Post
I exercised some ISO's last year, which is going to result in me owing the IRS a fairly substantial sum for AMT this year. Far more than I've ever had to pay them in the past.

I'm also forced to file actual papers because I did an 83(b) election, and my understanding is, when you file one of those, you have to file actual paperwork as there's no electronic filing when you do an 83(b).

I don't feel comfortable transferring the sum in question into my checking account and writing a personal check that's going to travel through the mail. I also do not want to do a credit card payment for that large an amount because of the fees, and none of my card limits are high enough to cover it anyway.

I hit the IRS' site for electronic payments, but it's kind of confusing. Anybody here have experience paying a large amount to the IRS, especially if a paper return filing is involved?

Thanks!
I pay all my taxes electronically whether I file by paper or not. The two are independent.

I use eftps.gov. It's quite straightforward once you set up an account.
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Old 04-03-2014, 11:22 PM   #17
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Originally Posted by LoneAspen View Post
The amount would be several tens of thousands, but not quite six figures.

The main reason I don't feel comfortable with personal check is...the money would have to sit in my checking account while I waited for the IRS to cash the check. I don't normally keep anything extra in my checking account over and above what I need to pay monthly bills.

Although I've never been hacked or had money stolen from my checking account (ATM fraud, debit card fraud, etc) it makes me nervous having that much in a checking account while I wait for a check to clear.

I'd feel safer wiring money from my brokerage account to the IRS, but I couldn't find a clear option for doing that on the IRS web site. I saw the EFTPS system mentioned, but my understanding is you give them account information of the source account, and they PULL the money from it. I'd rather SEND them the money like a normal wire transfer.

Maybe I'm not understanding the EFTPS system correctly...
No, you can't wire it from the brokerage.

I don't worry about the amount sitting in my checking account waiting for the IRS. It's usually only there for five days at most.
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Old 04-03-2014, 11:34 PM   #18
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does your brokerage account have a money market fund that allows you to write checks? Write the check on that account. (since it will be above the minimum limit). No need to move to regular checking account.
I used one of my brokerage accounts to write a check to the UST for $46k back in 2009 as part of my income tax return. It was from an intermediate-term muni bond fund. What's good about using that method is that I get to earn interest on the float until the check clears. Then again, the IRA was really fast in clearing the check. I mailed it out, from the post office (no return receipt, just mailed it from there to eliminate the postman and his travels from the equation) on a Thursday and by Monday it had already hit the bond fund's account. So much for float, huh?
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Old 04-04-2014, 07:26 AM   #19
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I just filed with Turbo Tax yesterday and used the direct FTP function from my bank to IRS. It goes out today so not too long a sit in the bank. Mine was higher than normal but not tens of thousands.
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Old 04-04-2014, 07:54 AM   #20
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I just sent a check drawn on my checking account. I did not even mail it registered nor return receipt requested. Why bother to draw attention to the envelope?
In the good old days I would often mail them my quarterly tax payment and continue to get interest on the funds for maybe six weeks or so, because it took them that long to cash the checks. Now they get the money as soon as they receive your check. I guess it doesn't matter much now anyway, with interest rates near zero.

Used to send rather large 5 figure checks in by Certified Mail Return Receipt Requested, then just Certified, then just stuck them in the mailbox. I got tired of the hassle of going to the Post Office. I figure there is as much of your bank info on a one figure check as on a five figure one. Right now I don't know if you are more secure electronically or sending paper. Seems both ways are open to some potential mischief.
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