How do I pay my federal income taxes with PayPal? (2024)

FAQs

How do I pay my federal income taxes with PayPal? ›

Electronic Federal Tax Payment System (EFTPS) – The best payment option for individual taxpayers or businesses making large payments is the EFTPS, which allows up to five payments per day. The system requires enrollment.

Electronic Federal Tax Payment System (EFTPS) – The best payment option for individual taxpayers or businesses making large payments is the EFTPS, which allows up to five payments per day. The system requires enrollment.

If you meet the IRS threshold in a given calendar year, PayPal will send you a Form 1099-K in January of the following year, and file this form with the IRS by the required due date.

The IRS has recently announced an additional delay in implementing the new $600 USD reporting threshold for goods and services transactions, reverting the 2023 requirement for Form 1099-K reporting back to the 2022 figures (total payments exceed $20,000 USD and there are more than 200 transactions).

To receive your tax refund with PayPal, your account will need to be set up to receive Direct Deposit payments. If you were approved for a PayPal Debit Mastercard®, you're automatically provisioned with a Direct Deposit account and routing numbers.

Taxpayers can pay when they file electronically using tax software online. If using a tax preparer, ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account. Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor.

IRS Direct Pay is a secure service you can use to pay your taxes for Form 1040 series, estimated taxes or other associated forms directly from your checking or savings account at no cost to you. Complete the five easy steps and you'll receive instant confirmation after you submit your payment.

The new "$600 rule"

Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income.

Why does the IRS require 1099-K forms to be issued? The IRS requires 1099-K forms be issued from payment processing services like PayPal in order to help small business owners observe tax reporting requirements.

Can the IRS seize your PayPal account? ›

Yes, the IRS can take money from your PayPal account. The IRS can levy your PayPal account in the same way that they would levy your bank account — by sending a notice to PayPal demanding that PayPal remit to the IRS the funds in your account up to the balance you owe the IRS.

Reporting threshold raised to $5,000 next year

That means people who receive more than $5,000 in payments via PayPal and other apps in 2024 would receive the 1099-K tax form in early 2025 to complete their 2024 tax returns.

For tax year 2024, the IRS will transition to a threshold of $5,000 with the $600 limit going into effect the following year, meaning that business transactions that surpass $600 will trigger the 1099-K form, which Venmo, Paypal, Cash App and others will create.

Once you receive $600 in payments for goods and services within a calendar year, tax laws require us to withhold 24% of such payments when you have not confirmed your taxpayer status by either providing your US tax ID or completing a Certificate of Foreign Status.

Three Ways to Pay

Pay your taxes online at www.eftps.gov, over the phone, or through your tax professional, payroll service, or financial institution.

The IRS has delayed a tax rule requiring payment platforms like Venmo and PayPal to send 1099-K forms to sellers who receive more than $600 in income a year. The agency plans to introduce a $5,000 threshold for 2024.

(updated July 13, 2023) EFTPS is used for most business payments. EFTPS may save you time if you are making quarterly estimated tax payments or making frequent payments. Direct Pay may be faster if you have an immediate payment deadline and have never used EFTPS.

One of our safe, quick and easy electronic payment options might be right for you. If you choose to mail your tax payment: Make your check, money order or cashier's check payable to U.S. Treasury. Please note: Do not send cash through the mail.

PayUSAtax is approved by the IRS to help taxpayers who want to use credit and debit cards or PayPal. Two other companies are approved to provide similar services. The IRS will not directly take these electronic payment methods.