Can you pay your taxes with bitcoin or other crypto?

Can you pay your taxes with bitcoin or other crypto?

03/27/2021

As the Internal Revenue Service (IRS) increasingly cracks down on taxable cryptocurrency transactions, some may wonder if the agency would also take bitcoin to pay off their tax bill.

The short answer: No. The IRS doesn't accept bitcoin (BTC), ethereum (ETH), or any other virtual currency, according to an agency spokesperson.

It also doesn't accept payments in euros, pounds, or any other foreign currency. But the agency does accept credit cards, personal checks, and even straight cash to settle a tax liability.

Read more: Bitcoin and cryptocurrency tax 2021: Tips and guide

Here's how to pay what you owe to Uncle Sam.

How to pay

From your bank account: Funds can be automatically transferred from your bank account to the IRS when you e-file your taxes through a tax prep software or tax professional. Choose the e-pay option. The IRS does not charge a fee for this transaction, but your bank might. Check before sending a payment.

The IRS also offers its "Direct Pay" service to pay directly from your checking or savings account at no cost. The agency can send email notifications to track your payment or you can use the IRS “Look Up a Payment” tool online by providing your confirmation number and Social Security number or Individual Taxpayer Identification Number (ITIN).

Read more: Taxes 2021: How to avoid scams this filing season

The payment will show up as "IRS USA Tax Payment," "IRS USA Tax Pymt," or something similar on your bank statement.

By debit or credit card: You can pay online, by phone, or by mobile device using one of three processors that work with the IRS: PayUSAtax, Pay 1040, or ACI Payments Inc. These processors charge a fee for the transaction, so it's smart to compare the three options.

Your payment will be listed as “United States Treasury Tax Payment” and your fee as “Tax Payment Convenience Fee” or something similar on your card statement.

By check, money order or cashier’s check: If you're mailing in your payment by check, money order, or cashier’s check, make it out to the "U.S. Treasury" and include the following information:

· Your name and address

· Daytime phone number

· Social Security number (or the first SSN to appear on a joint return) or employer identification number

· Tax year

· Related tax form or notice number

Mail your payment to the address on the notice or instructions, or use this IRS table to find the address. Don’t staple or paperclip your check to your tax return or voucher.

By cash: You can pay your tax bill at participating retail locations like 7-Eleven, Walgreens, CVS Pharmacy, Family Dollar, and Dollar General, among others. Depending on the method and retailer, there's either a $1.50 or a $3.99 fee per payment. It typically takes two business days for your payment to post, so give yourself enough time before the May 17 tax deadline this year.

Read more: Taxes: Here's how to know if you should itemize

To start the process, follow these four steps:

  • Step 1: Go to the ACI Payments website and follow the instructions for making a cash payment.

  • Step 2: ACI Payments will send an email that confirms your information. The IRS will then verify your information.

  • Step 3: After your information has been verified by the IRS, you will get an email from the Cash Processing Company with a link to your payment code and instructions. Print the payment code or send it to your smart phone.

  • Step 4: Visit the retail store listed in the Cash Processing Company's email. Have the clerk scan or enter your payment code. You will get a receipt from the store after you provide the cash. Keep the receipt as confirmation of your payment.

By wire transfer: Some banks allow same-day wire service for your tax payment. First you must fill in the Same-Day Taxpayer Worksheet. Ask your bank for cut-off times, fees, and other details. If making an international wire transfer, consult the Foreign Electronic Payments for more information.

Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter@JannaHerron.

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