EFTPS vs. Direct Pay: Which Should You Use to Pay Taxes?

The Internal Revenue Service provides secure, free online platforms for paying federal taxes. Two of the most prominent systems available are IRS Direct Pay and the Electronic Federal Tax Payment System, commonly known as EFTPS. Each system offers a distinct user experience and is tailored to accommodate different types of tax payments and taxpayer needs.

IRS Direct Pay

IRS Direct Pay is a web-based service operated by the IRS that allows for straightforward tax payments directly from a bank account. This system is designed primarily for individual taxpayers handling their personal tax obligations. It is a convenient option for making one-time payments without the need to create an account or go through a lengthy enrollment process. Taxpayers can use Direct Pay for a variety of Form 1040 series payments, including a balance due on an annual return, estimated taxes, or payments for an amended return.

The system also accommodates payments for installment agreements, extension requests filed with Form 4868, and additional taxes on qualified retirement plans. To use the service, an individual must verify their identity by providing specific information from a previously filed tax return. Payments are drawn directly from a designated checking or savings account, and the service provides a confirmation number upon submission. For individual taxpayers, IRS Direct Pay is limited to two payments within a 24-hour period.

The Electronic Federal Tax Payment System (EFTPS)

The Electronic Federal Tax Payment System, or EFTPS, is a more comprehensive payment service managed by the U.S. Department of the Treasury. It serves a broader audience, including businesses, fiduciaries, and individuals with more complex tax situations. Unlike Direct Pay, EFTPS is built to handle a vast array of federal taxes. Businesses frequently use it to remit payroll taxes, such as those for Form 941 and Form 940, as well as corporate income and excise taxes.

A defining feature of EFTPS is its requirement for pre-enrollment. Before making a payment, users must register for an account and receive a Personal Identification Number (PIN) via U.S. mail, which is used to activate the account. Once enrolled, taxpayers can schedule payments up to 365 days in advance and view their payment history for the last 16 months. This functionality makes it particularly suitable for managing recurring tax obligations, such as quarterly estimated taxes or federal tax deposits for businesses.

Information and Decisions Before Paying

To use IRS Direct Pay, you must have a copy of a prior-year tax return to complete the identity verification process. The required information includes your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), your date of birth, the filing status used on that return, and the exact address from the return. The system will ask you to select a specific tax year to pull this verification data from.

For EFTPS, the preparation involves gathering information for the one-time enrollment. An individual will need their SSN, name, address, and the routing and account numbers for the bank account they intend to use for payments. A business will need its Employer Identification Number (EIN), official business name, address, and bank account details. This information is submitted through the EFTPS website to begin the registration process.

How to Submit a Payment

For IRS Direct Pay, you will navigate to the Direct Pay portal on the IRS website. There, you select the tax category, the specific tax form, and the tax year for the payment. You will then enter the identity verification details you collected from your prior tax return, followed by your bank account information and the payment amount. After a final review, you can submit the payment and will receive a confirmation number.

For new EFTPS users, the first step is to complete the online enrollment and activate the account with a PIN that arrives by mail. Once enrolled, submitting a payment is straightforward. You log in with your credentials, enter the payment amount, select the tax form and period, and schedule the payment date before submitting.