Federal and State Payments - Electronic Funds Withdrawal Setup



How can I have tax payments for a 1040 return directly debited from a checking or savings account?

 

In an individual return, you can use the PMT screen (Electronic Funds Withdrawal) for direct debit payments for a:

Payments can be withdrawn from up to three taxpayer bank accounts. The PMT screen is divided into an area for each:

  • Account #1 - primary account for payment of one or more of the following:
    • a Federal balance due,
    • federal estimated tax payments,
    • a state balance due. For multiple states, select A in the State/City Selection drop list for all states with a balance due. 
  • Account #2 and Account #3- secondary and tertiary accounts for payment only of a state balance due if being withdrawn from a different bank account. A primary account payment (either Federal or state or both) must be set up before you can use these accounts.

Note: Always check the results from the PMT screen before transmitting a return. After a return is accepted, the payment information can be cancelled by contacting the IRS or state DOR, but it cannot be changed. See the FAQ section below for details. 

A federal payment amount can only be arranged to be made electronically if the amount due is less than or equal to $99,999,999 per IRS business rule FPYMT-057-03. This applies to the regular balance due and individual ES payments. 

Federal Balance Due

Complete Account #1 as follows:

  • Federal selection drop list. Select Y (you can make this selection with or without a State/City selection.)
    • If this field is left blank, no error is produced to prevent e-filing, but the Federal debit will not be made. 
  • Name of financial institution. Enter the name of the bank or financial institution from which to withdraw the balance due.
  • RTN. Enter the nine-digit bank Routing Transit Number (RTN).
  • Account number. Enter the taxpayer's bank account number.
  • Type of account. Select Checking or Savings.
  • Repeat account information. Reenter the RTN, Account number, and Type of account entries to confirm them. These entries must be made and must match your initial entries.
  • Payment is for. Select 1040, 1040X4868, or 2350, depending on the form to which the payment applies.
  • Federal payment amount. The amount owed on the return or extension is the default for this field. Use this override field to change the amount.
  • Requested payment date.
    • The date cannot be prior to five days before the current date.
    • If the return is transmitted to the IRS on or before the due date in the current processing year, the Requested Payment Date cannot be later than the due date.
    • If the return is transmitted to the IRS after the due date, the Requested Payment Date cannot be later than the current date.
    • See Related Links below for additional information about rejects related to the payment date. 
  • Daytime phone number. Default is the taxpayer's daytime phone number from screen 1. Use this override field to provide a different number for purposes of payment.

Federal Estimated Tax

Complete the fields described above, except for the following entries: 

  • Federal selection drop list. Select either Y (to pay both a Federal balance due and estimated tax) or E (to pay only Federal estimated tax and not a Federal balance due).
  • Federal area:
    • Select 1040 at Payment is for. Estimated payments are not transmitted for an extension, either 4868 or 2350.
    • Omit the remaining fields unless needed for a federal balance due payment.

In addition, complete the following items: 

  • Withdraw the following quarterly payments (required). Select the quarters for which ACH payment is to be made. You cannot override the payment dates - payment is scheduled on the quarterly due date.
  • Payment amount (override). Default for these fields is the calculated (or entered) estimated payments from the ES screen. An ES Code must be selected on the ES screen for payments (entered or calculated) to be made through the PMT screen.

‚ÄčEstimated Tax Payments must be set up and e-filed with the 1040. If the return has already been e-filed and accepted, you can make ES payments through 1040paytax.com or IRS.gov Payment Options center

State Balance Due

Account #1 can be used for a state payment with or without a Federal balance due or Federal estimated tax payment. If any payment is set up for Account #1 (state, federal, or both), you can also use Account #2 and Account #3 for additional state payments.

The State/City selection described below can be used to specifically select a state or city for payment, or to select All State or City ELIGIBLE tax types not included elsewhere. The latter selection does not cover any eligible state or city that you have specifically selected in another account on the PMT screen.

Complete Account #1 as described above for a Federal balance due, except as noted below.

  • State/City selection drop list. Select a state or city, or select All State or City ELIGIBLE tax types not included elsewhere. (You can make a selection with or without a Federal selection.)
  • Federal area. Omit these fields unless needed for a federal balance due payment.
  • State area. These fields are overrides. See the Help screens in these fields (press F1) for more information.
    • State payment amount. Default is the state balance due.
    • Requested payment date. Default for most states is the return due date.
    • Daytime phone number. Default is the taxpayer's daytime phone number from screen 1. Use this override field to provide a different number for purposes of payment.

Complete Account #2 and Account #3 as needed for payment of additional state balances due only if withdrawing from a different account, or overrides are needed. Federal payments cannot be made from these accounts.

Below is an example of a completed PMT screen where each state is being withdrawn from a different account.

Note: the first account section Account #1 may be used to withdraw all state payments if the payments are set to be taken from the same account - use A for the state/city selection. 

In View, the PAYMENT page for Federal balance due. Four other PAYMENT pages are available showing the ES payments:

In View, the Transaction Summary page shows all balance due debit transactions:

State Estimated Tax Payments 

State estimated tax payments cannot be made using only the PMT screen. Some states allow direct debit for ES payments, and some do not. If the states do allow ES Payments, they may be set up in the ES screen. Press F1 on the e-file checkbox to see a list of supported states. See Related Links below for details on this option.

Frequently Asked Questions

  • Can I use a federal refund to pay a state balance due? Can I use a state refund to pay all or part of a federal balance due?
    • If the federal return has a refund and the state has a balance due (or the state has a refund and federal has a balance due), there is no way to re-direct the refund to the other taxing authority in order to pay the balance due (amount due).
  • How can I confirm the payment information before I transmit the return?
    • Calculate the return. The Calculation Results screen Summary tab displays the Payment Method as Direct Debit.
    • Examine the PAYMENT form in View mode. This displays the ACH (Automated Clearing House) payment information that will be transmitted with the return.
    • In the return, go to view mode. Review the Transaction Summary page to confirm what will be directly debited.
    • Review the result letter to see the information for the payment(s) set up. 
      • Important: The result letter may not show as expected when a red message is present. This tells the software that the return will be paper-filed in which case the payment would not be included. Clear all red messages to confirm the transmission. 
  • Can I modify the direct debit information supplied on the PMT screen after a return is accepted? 
    • After acceptance of an individual or business return, your only option is to cancel the payment. The IRS advises:
  • "In the event Treasury causes an incorrect amount of funds to be withdrawn from a bank account, Treasury will return any improperly transferred funds.
  • Once your return is accepted, information pertaining to your payment, such as account information, payment date, or amount, cannot be changed. If changes are needed, the only option is to cancel the payment and choose another payment method.
  • Call IRS e-file Payment Services 24/7 at 1-888-353-4537 to inquire about or cancel your payment, but please wait 7 to 10 days after your return was accepted before calling.
  • Cancellation requests must be received no later than 11:59 p.m. ET two business days prior to the scheduled payment date.
  • If a payment is returned by your financial institution (e.g., due to insufficient funds, incorrect account information, closed account, etc.) the IRS will mail a Letter 4870 to the address we have on file for you, explaining why the payment could not be processed, and providing alternate payment options.
  • In the event your financial institution is unable to process your payment request, you will be responsible for making other payment arrangements, and for any penalties and interest incurred.
  • Contact your financial institution immediately if there is an error in the amount withdrawn."

Note: For more information, please see the IRS link Pay Taxes by Electronic Funds Withdrawal. You can also watch a video demonstration here: Electronic Funds Withdrawal.

  • Can I verify that an amount has been withdrawn from the bank account by the IRS through Drake Tax?
    • No, the IRS does not send back any sort of acknowledgement regarding the withdrawal so there is no way to verify this through Drake.