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Flick the switch on filing electronic tax deposits

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in Small Business Tax,Small Business Tax Deduction Strategies

During the past two decades, the IRS has been incorporating new technology into its procedures and processes. For instance, your business maybe required to deposit employment taxes through the Electronic Federal Tax Payment System (EFTPS).

Strategy: Pay taxes through EFTPS even if you don’t have to. Although many small-to-midsize businesses are still exempt, the system is easy to use, fast and secure.

Originally, the IRS set up EFTPS for employers that routinely deposit more than $25,000 in taxes. But the agency scaled back this requirement. Currently, your business must use the electronic method if it has aggregate tax deposits of more than $200,000. Also, the IRS requires that all start-ups use EFTPS.

The IRS bases the $200,000 threshold on the aggregate taxes paid for the 2006 tax year. This figure includes employment taxes, corporate income taxes and corporate excise taxes.

Why should you use EFTPS? Consider the following benefits:
  • Make your tax payment via the Internet or telephone.
  • Access EFTPS directly to report your tax information at least one calendar day in advance of the due date.
  • Keep funds in your account until the indicated date.
  • Receive immediate acknowledgment of your payment instructions. Your bank statement will confirm when payments have been made.
  • Initiate your tax payment 24 hours a day, seven days a week.
  • Schedule tax payments in advance (up to 120 days in advance for businesses) as an added convenience.
  • Change or cancel scheduled payments up to two business days in advance of the scheduled payment date.
  • Use EFTPS to make all federal tax payments, including income, employment, estimated and excise taxes.
Tip: Enroll in EFTPS online at www.eftps.gov/eftps or call the IRS at (800) 555-4477.

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