Overview

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

• Federal balance due

• Federal estimated tax

• State balance due

• State estimated tax

Payments can be withdrawn from up to three taxpayer bank accounts.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• Account #2 and Account #3- secondary and tertiary accounts for payment only of a state balance due if being withdrawn from a different bank account.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.

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.)

  Caution  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, 1040X, 4868, 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.

• 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.

State Balance Due

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.

*State Payment Dates Notes

Hawaii and MI Common Cities require the payment date to be the same as the date of transmission. They do not allow any future payment dates.

Maryland allows payments made through e-file to be scheduled through April 30th, even when the return is due April 15th (or later depending on weekend or holiday guidelines).

Colorado does not allow payments to be made on weekends or bank holidays.

Arizona and Arkansas do not allow payments to be made on weekends.

Washington, DC does not allow payments on weekends or holidays (Emancipation Day).

Massachusetts does not allow payments to be made on a holiday (Patriots Day).

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.

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 check box to see a list of supported states.

Direct Deposit and Direct Debit

You can use both the PMT screen and the DD screen in the same return. Make the appropriate selections on each screen and then verify that the Transaction Summary shows as intended.

Example 1: Federal refund, state balance due

• On the DD screen: 

  • Select Y from the Federal selection drop list and leave the State/city selection blank.

  • Enter the financial institution information, including the name, RTN, account number, and type of account. Be sure to duplicate the information on the Repeat account information line.

• On the PMT screen:

  • Select N from the Federal selection drop list and the appropriate state code from the State/city selection drop list.

  • Enter the financial institution information, including the name, RTN, account number, and type of account. Be sure to duplicate the information on the Repeat account information line.

Example 2: Federal balance due, state refund

• On the DD screen: 

  • Select N from the Federal selection drop list and select the appropriate state code from the State/city selection drop list.

  • Enter the financial institution information, including the name, RTN, account number, and type of account. Be sure to duplicate the information on the Repeat account information line.

• On the PMT screen:

  • Select Y from the Federal selection drop list and leave the State/city selection blank.

  • Enter the financial institution information, including the name, RTN, account number, and type of account. Be sure to duplicate the information on the Repeat account information line.

Example 3: Federal refund, state balance due, and direct-debit federal estimated tax payments for the second and third quarters.

• On the DD screen: 

  • Select Y from the Federal selection drop list and leave the State/city selection blank.

• On the PMT screen:

  • Select E from the Federal selection drop list and the appropriate state code from the State/city selection drop list.

  • Enter the financial institution information, including the name, RTN, account number, and type of account. Be sure to duplicate the information on the Repeat account information line.

  • Check the boxes for what quarters should have payments withdrawn.

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 Summary tab on the Calculation Results window displays the Payment Method as Direct Debit.

Examine the PAYMENT form in View/Print mode. This displays the ACH (Automated Clearing House) payment information that will be transmitted with the return.

In the return, go to View/Print 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 an EF 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 EF 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."

For more information, see the IRS link Pay Taxes by Electronic Funds Withdrawal. Watch the video Electronic Funds Withdrawal for a demonstration.

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 Tax.