Tax season can be overwhelming, and we know how important it is to ensure your IRS payments are set up accurately. We are here to walk you through the process, providing helpful tips to make managing your payments easier and more efficient!
As you are getting your payments set up, it is important to note that, despite being a business, you need to set up an Individual Account, not a Business Account.
The Individual account setup should look like this:
All payments made to the IRS should be made through your personal bank account, not your business account. This is because your S Corp business is a flow through entity, so all of the profits ‘flow through’ to you personally. If you need funds from your business account to cover this payment, please transfer the amount needed from your business account to your personal account first and we'll categorize it as a ‘shareholder distribution' in your books.
Estimated Payment Instructions:
We highly encourage you to create an Individual account with the IRS directly instead of using Direct Pay because it can be a bit confusing. However, if you prefer to use Direct Pay, the steps are provided below for your reference.
This will allow you to make your estimated payments, view payment history, and confirm that payments made are for the correct tax year.
Direct Pay steps for making a payment:
-
Make your Federal estimated payment here
-
Reason for Payment select “Estimated Tax”
-
Apply Payment to “1040ES (for 1040, 1040A, 1040EZ)" will auto populate
-
Tax period for Payment select the applicable tax year and click “Continue” then a window will appear to verify your selection then select “Continue”
-
Tax Year for Verification, enter the last tax return year the IRS has on file. Please note: This is not the payment year and if you recently filed your tax return then select the year before as the IRS may not have the most recent return on file yet
-
Enter the filing status you filed for that tax year
-
Enter your name, social security number, date of birth, and address that matches the tax year you selected for verification
-
Check the box for “I accept the Privacy Act and Paperwork Reduction Act.” then select “Continue”
-
Enter your payment amount and payment date
-
Enter your bank information and type of account
-
Check the box for “I would like to receive email confirmation notification and agree to the Email Terms of Service.” then enter your email address and select “Continue”
-
Review that the information is accurate then select “Submit”
-
Final step is to send us a copy of the confirmation page so that we can retain it for our records, please upload the copy that includes the amount paid to app.collective.com. Below is a redacted version of the document we would like to receive:
Please Note: If you have any questions or concerns using Direct Pay, your best point of contact is the IRS. Collective is unable to advise on this matter. You will need to connect with the IRS.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.