Archive for the ‘Personal Finance’ Category

School’s Out For Summer, But Tax Credits Are Still In

Tuesday, May 26th, 2015

Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit.

Read: Can My Summer Day Care Expenses Earn A Tax Credit?

8 Tips To Help You Claim The Child Care Tax Credit

  1. Child care must have been provided so that you (and your spouse if filing jointly) can work or actively look for work. Your spouse must also meet this obligation during any month in which the child was a full-time student or was physically and/or mentally incapable of self-care.
  2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There’s an exception to this rule for a spouse who is a full-time student or who is physically and/or mentally incapable of self-care.
  3. Care must have been provided for dependent(s) younger than 13 years old. Your spouse or another dependent qualifies if they lived with you for more than have the year and are physically and/or mentally incapable of self-care.
  4. Qualifying child care expenses include those that are used to secure enrollment at a daycare facility outside the home or at a day camp. Expenses for overnight camps or summer school tutoring do not qualify. NOTE: If you pay someone to come to your home to care for your child or children, you may be a household employer. For more information, see IRS Household Employer’s Tax Guide.
  5. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses.
  6. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person and can be up to 35 percent of your expenses, depending on your income.
  7. You can claim up to $3,000 of your total unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying persons.
  8. Keep your receipts and records to use when you file your 2015 tax return next year.  Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Email Rea & Associates to learn more about the Child and Dependent Care Tax Credit or other tax incentives you may qualify for.

By Denell Skelton, CPA (Coshocton office)

 

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Investing In Your Business’s Immortality

Monday, May 11th, 2015
Business Teamwork - Rea & Associates - Ohio CPA Firm

Ensuring that you have the right team in place – from the ground floor to upper management – is a solid, common sense strategy for business owners who are looking to add short-term and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Go ahead. Take pride in all that you’ve accomplished. Relive the moment you decided to go into business and reflect on your trials and triumphs. And as you reminisce, identify everyone who helped you achieve your vision – because chances are you didn’t get where you are by yourself.

Make no mistake. In business, the strength of your team directly impacts your company’s success and overall val­ue. Therefore, it’s never been more im­portant to ensure that your exit from the company doesn’t lead to a “going out of business” sale.

Read: This Is An Intervention – Step Away From Your Business

Your Company’s Longevity

As a business owner, it’s your responsibility to continually evaluate your busi­ness. Part of the evaluation process is ensuring that the right people are in the right place to help guide and grow your company – even when you’re not around.

Whether they move on or retire, eventually every person on your leadership team will leave, including you. You must decide what kind of impact this will have on your company when it happens.

One of the best strategies you can em­brace is to become obsolete. That’s not to say that your work is not important, it just means that your team, your business, does not depend on you for its survival.

Every time you recruit an employee, you have an opportunity to reinforce your company’s mission. Do your due diligence to make sure the people you hire are on board with the company’s vision. They will continue to set the tone after you leave, which is why the qualities you consider when hiring a candidate should go beyond their education and experi­ence. Anyone you hire must have the passion to succeed, the capacity to learn and a personality that helps them easily overcome complicated situations. From entry-level to leadership positions, your ability to maintain a strong team ensures the longevity of your business.

Is Your Team Valuable?

Ensuring that you have the right team in place – from the ground floor to up­per management – is a solid, common sense strategy for business owners who are looking to add short- and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Email Rea & Associates to learn more.

By Don McIntosh, CPA, CGFM, CFE (New Philadelphia office) and Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

 

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Retirement Plan Design: One Size Does Not Fit All

Monday, May 11th, 2015
Planning Ahead for Retirement Makes All The Difference - Rea & Associates - Ohio CPA Firm

When it comes to your retirement plan, planning ahead can mean the difference between sipping tropical drinks on a beach to taking on a part-time job at 75 to make ends meet. Is your retirement plan advisor working in your best interest?

Do your employees dream of spending their golden years on a sun-drenched beach, sipping tropical drinks from a coconut shell? Or do you think they’re looking forward to taking on a part-time job at age 70 to pay medical bills and their mortgage? Like you, they’re probably expecting an R&R-fueled retirement – but they need your help getting there.

Read Retirement Roulette

An employer-sponsored retirement plan is a great tool for business owners. Not only do retirement plans provide businesses with leverage when it comes to attracting and retaining a skilled workforce, employers that make contributions to their employee’s accounts are entitled to tax incentives – which gives you more control over your company’s cash flow.

From Business Strategy To Retirement Planning

Whether your company presently offers a retirement plan or is planning to beef up its benefits package, work with a retirement plan advisor who can review your options and identify the plan that best addresses your company’s unique challenges. You’ll need to:

  1. Identify The Primary Purpose Of Your Retirement Plan
    Will your retirement plan be used as a recruitment tool or as a tax shelter? While all plans accomplish a little of both, make sure your plan design meets your needs. For example, when a closely held business offers a retirement plan, its primary goal is to provide maximum retirement benefits and income tax deferral to the owners, while minimizing the cost of benefits to the employees. Incorporating a retirement plan into your existing benefit package is also an opportunity to diversify your assets away from the reach of creditors – making you less dependent on the value of your company to provide an income stream in retirement.
  2. Get To Know Your Team
    Does your company hire younger workers? Do you have an established workforce that will retire from your company? Do you have high turnover? What does your projected workforce growth look like? Your plan design should consider your demographic information – and promote the short- and long-term financial wellness of your employees and your business.
  3. Put Your Own Retirement Goals In Perspective
    Your employees aren’t the only ones looking at your employer-sponsored retirement plan as a dependable source of retirement income. You and other key employees will likely use the plan as well. That’s why, during the design phase, your advisor will take a look at the current and projected profitability of your company alongside the ratio of key employees and the company’s other employees.

When all is said and done, your plan design could be the thing that stands between your employees and a comfortable retirement – or it could be what lets them reap the benefits of all their years of hard work.

This is a great time of year to explore your options. Email Rea & Associates to learn more.

By Paul McEwan, CPA, MT, AIFA (New Philadelphia office)

 

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Cash Continues To Flow From Ohio’s Shale Industry

Thursday, April 23rd, 2015
Companies Eye Mercer County For Fossil Fuel

Current news reports suggest that oil and gas companies will continue to invest in Ohio’s shale industry which could provide more opportunities for land owners.

For many of us, the future of Ohio’s shale industry has become a regular topic of conversation. And as a landowner in the state’s Marcellus and Utica shale regions, you’ve probably wondered what (if any) effect current events, such as the state budget and plunging energy prices, will have on your financial well-being. While nobody can predict the future, I’m optimistic we won’t see any major slowdowns over the next few years. Here are a few reasons why:

Severance Tax Sees The Cutting Room Floor

We recently learned that Gov. Kasich’s plan to increase the state’s severance tax on horizontal drilling to pay for the plan to cut income taxes was removed in the newest rendition of the state’s proposed budget bill.

The governor’s original two-year budget plan called for oil and gas produced by horizontal wells to be taxed at a 6.5 percent tax rate for product sold at the wellhead – while 4.5 percent tax would have been applied to product sold downstream. Earlier this year, Ohio Tax Commissioner Joe Testa told the media that the governor’s proposed tax hike was because Ohio’s horizontal drilling industry has become more developed and that drilling has proved to be less expensive than anticipated. In response, American Petroleum Institute’s Executive Director, Chris Zeigler, argued that the original budget proposal placed the “future development of Ohio Shale at serious risk.”

Now that the proposed tax increase in question has been removed, one could assume that drilling companies are breathing a sigh of relief. However, while there appears to be no new initiatives in play to raise the existing severance tax rate at the moment, the new budget proposal still has a long legislative journey to make before the June 30 deadline.

Shale Investment Appears To Be Untouched By Low Energy Prices

Lower prices at the pump might be a bit unnerving if you are, for example, in the process of finalizing a mineral lease agreement. But have no fear, even though new drilling initiatives in Ohio’s shale regions are slowing, according to Business Journal Daily, “oil and gas exploration continues to have positive ramifications across the region.”

As Ohio’s oil and gas industry matures, it continues to become more efficient, which has helped it persevere at a time when oil producers in the Middle East and elsewhere appear to be maintaining higher production quotas in an effort to price horizontal drillers out of the market. For example, the practice of “super fracking,” by which producers pump higher quantities of sand into the wells they fracture, has increased productivity from 400 barrels a day to 600. The result is a lower break-even cost for producers and, in general, more staying power than experts had initially thought.

To date, Energy In Depth, an oil and gas trade organization, estimates that Ohio’s shale industry has grown to $22.3 billion, and expects it to grow by another $8.1 billion by 2016, with the construction or extension of additional pipeline infrastructure, power plants and processing plants. In other words – don’t expect the Ohio’s oil and gas industry to slow down any time soon. In fact, it could be expanding as landowners from other parts of the state appear to have been approached by companies looking to increase their reserves.

Companies Eye Mercer County For Fossil Fuel

About 10,000 acres of farmland located in the Mercer County area, about 60 miles southwest of Lima, has been leased for 3D seismic oil and gas exploration according to The Daily Standard, a local news publication. The leased property, which is primarily farmland, will be subjected to noninvasive 3D seismic tests that will identify whether “significant amounts of oil and/or gas” are present. The results are expected to be available by June.

The newspaper reports that “[more] than 90 land leases involving thousands of acres have been filed in Mercer County since 2013 between various companies and property owners … the legal documents give companies access to test, drill or perform other action on the land as stipulated in each agreement.” Mercer County Commissioners agreed to test some government-owned property as well.

This news is not only important to the residents of Mercer County, but to residents throughout Ohio. The fact that companies are actively seeking to further their investment within the state is promising for all landowners. And at the very least, this recent move signifies that these companies have no plans packing up and shipping out anytime in the near future.

Email Rea & Associates if you have questions about how current events could affect your leasing options or if you are considering entering into a lease agreement for drilling or exploratory purposes.

By David Shallenberger, CPA (Wooster office)

 

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Retirement Roulette

Wednesday, April 22nd, 2015
Retirement Roulette - Rea & Associates - Ohio CPA Firm

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

It’s difficult to paint a picture that adequately portrays the retirement readiness of the American people. How prepared the average person is for this phase of their life greatly depends on which report you are reading today. As a whole, however, credible sources indicate that as a population we are simply not prepared to take on the financial responsibility of supporting ourselves later in life, which is a problem that has received a lot of attention from our nation’s leaders.

Last year marked the introduction of myRA, a retirement account program that encourages individuals without access to an employer-sponsored retirement plan to save for their retirement. Developed by the United States Department of the Treasury, myRA seeks to offer a solution to those who “face barriers to saving for retirement.” But that’s not the only chatter heard on Capitol Hill these days, with regard to the retirement savings habits of Americans. Members of Congress have proposed other solutions that they hope will make the retirement picture a little bit brighter.

Read:  Retirement Is Knocking … Are You Ready To Answer The Door?

2016 Budget Proposal Addresses Retirement Savings

The U.S. government’s 2016 Budget Proposal includes provisions that target the promotion of retirement goals.

“Millions of working Americans lack access to a retirement savings plan at work. Fewer than 10 percent of those without plans at work save in a retirement account on their own. In 2015, retirement security will be one of the key topics of the White House Conference on Aging. The Budget would make it easy and automatic for workers to save for retirement through their employer – giving 30 million more workers access to a workplace savings opportunity. The Budget also ensures that long-term part-time employees can participate in their employers’ retirement plans and provides tax incentives to offset administrative expenses for small businesses that adopt retirement plans.”

What is important to note is that, in addition to retirement security, the Proposal focuses on generating government revenue, which would (in part) go toward the creation of new tax benefit programs. The impact, according to the Whitehouse, would result in savings for as many as 30 million American taxpayers.

Today, nearly 78 million working Americans are unable to save for retirement simply because they are not eligible to enroll or because their employer doesn’t offer the opportunity to save for retirement. This Proposal introduces a solution for those who would like to begin saving for their golden years.

For example, one possible scenario outlined within the budget calls for all part time workers (those who have worked for their current employer at least 3 consecutive years and who have worked at least 500 hours during each year of their employment), who are not currently contributing to a retirement plan, to be allowed to contribute to the company’s existing retirement plan without requiring the plan sponsor to add matching contributions for such individuals.

Another is for those who do not have access to an employer-based retirement plan, however, would be automatically enrolled in a separate IRA program, which would be funded by payroll withholdings. Of course, the taxpayer would have the option to opt out of the program.

What’s In It for the Employer?

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

This provision would also include an additional credit for small businesses that currently offer retirement plans to include an automatic enrollment feature within their plans.

Employees who are still unable to save for retirement will have a third option available. The Budget Proposal calls for the allocation of $6.5 million to the Department of Labor, which would allow a limited number of states to implement state-based auto enroll IRAs or 401(K)-type programs.

Mind the Cap

President Barack Obama’s 2016 Budget Proposal, while ambitious in its initiative to strengthen Social Security and incentivize retirement savings programs for Americans, also includes a provision that had been proposed (and rejected) before. The additional provision seeks to cap (prohibit additional contributions) on IRAs and other tax-preferred retirement plans once they reach a balance of $3.4 million.

According to the president, this step ensures that the individual secures sufficient annual income in retirement while preventing the “overuse” of existing tax advantages by those who are able to contribute additional funds, creating higher balance accounts. The cap would also help the government generate additional revenue because the funds that exceed the $3.4 million cap would now be taxable under this provision.

As always, when it comes to the future of Social Security and the overall retirement readiness of the American people a lot can change in a short amount of time. The 2016 Budget Proposal still has a long way to go before any of the provisions outlined within become reality. It’s important for you to be aware of these provisions and how they could change our current retirement plan landscape.

In the meantime, don’t just wait for changes to happen. Take steps today that will maintain the flexibility of your existing benefit plan while optimizing your company’s current and future ROI. Email the Benefit Plan Audit team at Rea & Associates to learn more.

By Darlene Finzer, CPA, QKA, CSA (New Philadelphia office)

 

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Six Things You Can Do Now To Protect Your Loved Ones’ Assets

Tuesday, April 14th, 2015
Making Moments Count: Family Financial Challenges

Bright Idea: Make sure everyone in your family has their financial information organized in one place. The organizer you’ll find in the financial resources section of our website is a great place to start. Click here to view our Personal Financial Records Document and get started today.

The value of our existence is measured by an infinite collection of meaningful moments that have shaped our lives and the lives of those around us. Perhaps our most precious moments occur when we positively impact the lives of our loved ones. We are all capable of initiating these moments and, sometimes, a simple conversation is all that is needed to provide insurmountable relief – now and for years to come.

Find out what else you can do now to improve your personal and financial well-being.
Read: Take Control Of Your Financial Wellness In 2015.

Even if they have never expressed their concern about the realities of aging before, it is almost certain that your parents are worried about their own mortality. Because this topic doesn’t typically find its way into casual conversation, it is your responsibility to broach the subject. Your parents will be grateful you did.

Here are five things you can do now to actively protect your loved one’s assets:

1. Overcome Your Discomfort

The first conversation about your loved ones’ finances is probably the most uncomfortable one, but it’s also the most important. It’s uncomfortable to talk to our parents about their death. Mom and Dad don’t find it thrilling either because they don’t want to be a burden. But as awkward as it is to discuss, you may eventually be shouldered with responsibility of managing the affairs your parents leave behind.

2. Set Up A Power Of Attorney

In order for you to assume this important role, you must be named as your parents’ power of attorney. This step gives you legal authority to pay their bills, maintain their residence, complete tax returns and review their financial investments.

If your power of attorney was established more than two years ago, verify that it was issued properly by today’s standards. Even though powers of attorney never expire, some have reported having problems with establishments that have updated their forms. The new forms no longer identify powers of attorney that were named several years ago.

Your parents can name multiple powers of attorney. But to avoid possible disputes, make sure that you and your siblings have your own, clearly defined responsibilities. Also, if your parents have decided to name a power of attorney, and it’s not you, make a point to respect their decision – even if you don’t agree with it. As long as a plan is in place, you and your family are on the right track.

3. Understand Your Responsibilities

Being a power of attorney is a big responsibility. Not only are you empowered to make tough decisions, your actions are now able to be scrutinized by everybody from the IRS to other family members. To avoid problems, carefully track how much money is coming in and going out and maintain thorough records. And call in the professionals if you feel like you’re in over your head.

4. Send In The Team

In the past, did your parents work with a team of professionals to manage their finances, legal affairs or anything else? If so, make it a priority to talk to them before moving any money or assets around. You will need to know if your parents set up a will, trusts, or anything else over the course of their lives. This team will not only be able to compile the information you need, they can answer your technical questions, which will make the entire process go smoother.

5. Compile An Inventory

To manage anything well you must have a clear picture of what it is you are managing. To that end, make it a point to compile a complete inventory of your parent’s assets and liabilities to create a clearer plan of action.

Do you know how the value of real property is determined?
Read: How Do You Value Property For An Estate In Ohio to learn more.

6. Simplify, Simplify, Simplify

Once you understand your responsibilities, simplify everything. For example, if your parents have seven or eight open bank accounts throughout the county or state, consolidate them into one – and don’t stop there. From assets to investments, consolidating these affairs will make your job easier and less confusing as you try to track expenses.

It’s not easy to manage your loved ones finances, but with the right approach, plan and team of advisors, you can do it – and do it well. Once you get your ducks in a row, you can focus on other, more important things – like making every moment with your loved ones count.

By: David K. McCarthy, CPA, CSEP (Medina office) and Frank L. Festi, Jr. CPA, CFP (Medina office)

This article was originally published in The Rea Report, a Rea & Associates print publication, Winter 2015. If you don’t already receive The Rea Report, our quarterly print newsletter, in your mailbox, click here and start your subscription today!

 

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The Truth About Tax Extensions

Friday, April 10th, 2015

We find ourselves, once again, at the end of another income tax season. A time of year that many American taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, there is still plenty of tax work to be done.

The first four months of the year is a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension.

Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!


The Truth About Tax Extensions – Created with Haiku Deck, presentation software that inspires

Myth 1:

Filing a tax extension increases your chance of an audit.

Truth:

First and foremost, your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In fact, in the event that you are chosen to undergo an audit, you will be able to go into the process with more confidence. Tax extensions can be great for businesses that were simply overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the files and information necessary to make tax return prep as seamless and thorough as possible.

Myth 2:

Tax extensions burden accountants.

Truth:

On the contrary, fling an extension not only gives your accountant extra time to check and double check the work, it gives them the added time needed to provide better service. For example, we pride ourselves on our work ethic, attention to detail and client service – especially during busy season. However, as trusted financial advisors, we are able to better serve our clients better when we have a chance to help them understand the opportunities they qualify for and how they can use certain tax strategies to help plan for the future. Believe me when I tell you that we do not look at extensions as burdens.

Myth 3:

There is nothing to gain by filing a tax extension; it’s just a way to prolong the inevitable.

Truth:

Filing a tax extension not only gives you more time to file your return with the IRS and the state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time pay your profit sharing plan, defined benefit, or your SEP IRA as part of your retirement plan contribution, which is an excellent short- and long-term benefit! Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.

Email Rea & Associates to learn more about the benefits of filing income tax extension with the IRS and the state.

By Tiffany Crawford, JD (Lima office)

 

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Preserve Ohio History While Filing Your Taxes

Wednesday, April 8th, 2015

We’re down to the wire. Just another week to go before April 15 – Tax Day. If you’re still working on your taxes, and are looking for an opportunity to make a donation on your state tax return – consider supporting the Ohio History Connection’s efforts. Read on to find out how you can support history preservation efforts throughout Ohio and even in your community.

 

Guest blog post by Emmy Beach of the Ohio History Connection:

The Ohio History Connection has developed an innovative way to help Ohioans support history preservation efforts across the state and in their communities. The best part: it can all happen in a matter of seconds.

It’s called the History Fund. The History Fund creates grants to help support local history and preservation-related projects in communities throughout Ohio. The History Fund is supported by Ohio taxpayers that select “Ohio Historical Society” as a donation fund on their state tax returns (the state tax form hasn’t caught up with their recent name change yet.).The entire process takes just seconds to complete.

The impact of donations can last for generations. Over the last three years, the History Fund has received nearly $300,000 in voluntary funding from Ohio taxpayers. This allowed the Ohio History Connection to green light more than 30 historic preservation projects that wouldn’t have received funding otherwise. History organizations have been able to accomplish important projects that have been on their wish-lists for years.

The History Fund impacts organizations big and small. This year, Cleveland’s Rock and Roll Hall of Fame received a grant to preserve the work of Plain Dealer rock and roll reporter Jane Scott; in Athens, the Dairy Barn Arts Center received a grant to repair the structure of their community’s popular arts venue. In each case, the generosity of Ohioans helped preserve a chapter of Ohio’s more than 200-year-old story.

“The History Fund helps us share and preserve Ohio’s story by supporting local projects and programs in communities throughout the state,” said Burt Logan, executive director and CEO for the Ohio History Connection. “The work of local history organizations is helping to strengthen our heritage and ensure Ohio’s story is told for years to come.”

The History Fund needs to receive at least $150,000 this coming tax season to stay on Ohio’s tax forms for the next two years.

The grant program received $165,000 last year, with average donations of around $10.

“Small donations can make a big difference,” said Andy Verhoff, History Fund grants manager. “If every donor who gave last year gives just $10 from their refund, we’ll cross over the $150,000 threshold easily and have even more to grant in the future.”

The tax check-off process is a win-win for taxpayers and the state. History and preservation organizations across Ohio are revitalizing their communities, one project at a time.

To learn more, visit the Ohio History Connection History Fund page. You can also see historic Ohioans Annie Oakley and the Wright Brothers promote the History Fund in public service announcements videos below.

 

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How To Pay Your Tax Bill In 6 Easy Steps

Wednesday, April 1st, 2015
Pay Your Tax Bill With Direct Pay - Rea & Associates

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances.

By now, you probably have a good idea whether you have an outstanding tax bill from the government, but did you know you can settle your balance online? Since May 2014, Direct Pay, a free and secure payment option, has provided millions of taxpayers with the option of making payments to the Internal Revenue Service at a time, and in a place that is convenient for them.

Late last year, employers learned that they were expected to file their taxes and make payments exclusively online. Click here to read more.

According to the IRS, four months after the initial launch of the payment program, more than a million payments, totaling more than $1.7 billion, were successfully processed. The web site currently accepts payments for current year tax returns, estimated tax payments, extension payments and prior year balances.

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances. Those who make payments receive an instant confirmation message that their payment has been submitted. Or, if you need a little more time, you can schedule your payment up to 30 days in advance as well as choose if you would like your payment to be withdrawn directly from a checking or savings account. Making a payment is as easy as following six simple steps.

How To Make An Online Tax Payment

  1. Visit the government website at www.irs.gov/payments
  2. Click on the blue box labeled: “IRS Direct Pay”
  3. Choose the reason for making your payment. Your choices are that you are making an installment agreement payment, a tax return payment, an estimated tax payment, an amended return payment or “other” type of payment. Be sure to choose the applicable year.
  4. Next, verify your identity by confirming your filing status, social security number, address and date of birth. ID verification is required for each payment requested.
  5. Then, you must enter the amount you plan to pay and your bank information. (The IRS does not retain any routing or account numbers.
  6. Finally, you will be directed to a “final authorization” page, which will provide you with an online confirmation.

Once your payment has been submitted using Direct Pay, allow two business days for processing. Note: Payments submitted after 8 p.m. EST will be processed on the next business day. And if you need to make a change to your scheduled payment, you can edit or cancel the payment up to 11:59 p.m. EST two business days before the payment is scheduled payment date.

Ohio Online Tax Payments

If you owe taxes to the State of Ohio, you can make your payments online as well by visiting www.tax.ohio.gov. The state’s online payment system also allows for advance payments and does not require registration.

Online payment options are another way government entities are making an effort to provide more user friendly services. By using Direct Pay, or the state’s web-based payment option, you can avoid a trip to the post office and, better yet, have more control over when your payment is made and received. Your tax preparer can help you determine if online payments make sense for you and can answer any questions you may have. Email Rea & Associates to learn more.

By Wendy Shick, CPA (Mentor office)

 

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