How to Open an Account With The IRS

It’s no secret that tax season is stressful for everyone, especially for those preparing their tax return. Luckily for us, though, the IRS has jumped into the twenty-first century and made things simpler for hard-working taxpayers by allowing filers to open an online account. The IRS online account takes a lot of the guesswork and waiting out of filing taxes. 

With the IRS online portal, you can make payments, set up a payment plan, access prior-year tax records, and more. In this article, we’ll delve deeper into why you should open an online account with the IRS, and how you can do so.

Opening an account with the IRS simplifies filing your federal taxes.

Why Should You Open an Account With the IRS?

• Opening an account with the IRS simplifies filing your federal taxes.
• You can perform numerous tasks that make your life easier through the online account portal.
• With an IRS account, there's no need to mail checks for tax payments, eliminating concerns about timely and accurate delivery.
• Payments can be made on the same day using credit card, debit card, or bank information, removing the uncertainty of payment submission.
• Access to tax records from previous years, such as tax transcripts, is available, aiding in applications for mortgages or loans that require past tax information.
• The ability to set up a payment plan directly on the IRS website is now available for those unable to pay their tax bill in full, saving the time and effort previously spent on contacting the IRS and negotiating payment plans.

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Preparing to Open Your IRS Online Account

Some preparation is involved before you can enjoy the conveniences of an online IRS account. You'll need several pieces of information on hand to create your account:

• Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Access to your email account
• Your filing status and address from your latest tax return
• Your personal account number from a credit card, mortgage, home equity loan, home equity line of credit, or car loan
• A mobile phone registered in your name (for secure access codes)

Understanding your taxable income is also crucial at this stage. Taxable income is any money, goods, or services you receive that must be reported on your tax return for a calendar year. This knowledge will help you navigate your IRS account more effectively, especially when reviewing documents or calculating tax liability.

Step-by-Step Guide to Opening an IRS Online Account

Opening an IRS online account is a straightforward process that involves registering through ID.me, a secure identity verification service now required by the IRS. Here’s how you can set up your account:

1. Visit the IRS Website: Go to the Your Account Online page on the IRS website. Start the signup process by clicking the blue "Sign in to your online account" button.
2. Redirect to ID.me: After the waiting page redirects, you'll see options to log in to an existing ID me IRS account, or to sign up for a new ID.me account. Select the option to create a new ID.me account by clicking the "Create an account" button outlined in green.
3. Create Your ID.me Account:
   1. Enter Your Email and Password: On the ID.me page, enter your email address and choose a password.
   2. Confirm Your Email Address: Verify your email through a confirmation link sent to your inbox.
   3. Enable Multifactor Authentication: Set up multifactor authentication using your phone to add an extra layer of security to your account.
4. Choose ID Verification Method:
   1. You have two options for verifying your identity: Self-Service with a "video selfie" or a Video Chat with an ID.me agent.
   2. Upload Your ID: Take clear photos or scans of your identification document and upload them.
   3. Video Selfie or Video Chat: Complete the verification process by taking a "video selfie" or scheduling a video chat with an ID.me agent. The video selfie is quicker, but if you prefer, you can opt for a video chat, which may take an hour or two.
5. Enter Personal Information: Provide your Social Security number as part of the verification process.
6. Authorize IRS Access: Finally, consent for the IRS to access your ID.me verification information. This step is crucial for linking your verified identity with your IRS online account.

Your online account will be activated once the IRS can access your ID.me verification. You can then access various functionalities, from checking your tax records and filing status to managing payments and plans. This secure system ensures that your tax information is protected while providing you with easy access to manage your taxes efficiently.

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Navigating Your IRS Online Account

After successfully creating your account, you'll gain access to a dashboard that offers a comprehensive view of your tax information. This includes:

• Tax Records: View detailed records for the current and previous tax years, including tax year 2023 and tax year 2024.
• Income Tax Returns: Access and download copies of your filed income tax returns.
• Tax Liability: Check the amount of tax you owe and details on any payment plans you've arranged.

This online system simplifies how you manage your taxes, providing a clear overview of your federal tax situation.

Understanding Taxable Income and Tax Liability

A key part of managing your taxes online involves understanding your taxable income and how it affects your tax liability. Taxable income includes wages, salaries, bonuses, tips, investments, and unearned income. For the calendar year, your total taxable income determines the amount of tax you owe.

You'll use Form 1040, the U.S. Individual Income Tax Return to calculate your tax liability. This form considers your total income, deductions, and credits to determine the tax you owe. If your taxable income exceeds certain thresholds, such as the threshold of $5,000 for specific deductions or credits, it may affect your tax calculations and potential payment plans.

Managing Tax Payments and Plans

One of the significant advantages of your IRS online account is the ability to manage tax payments and set up payment plans directly through the platform. This feature is particularly beneficial for taxpayers who owe but cannot pay in full immediately:

• Payment Options: You can make payments via direct transfer from a bank account, credit card, or even by setting up a direct debit installment agreement if your tax bill is large.
• Payment Plans: For taxpayers who owe $5,000 or more, the IRS offers payment plans that can be directly managed and applied for through your online account. These plans provide a structured way to pay off your tax debt over time, making managing your financial obligations to the IRS easier.

Transition Year and Tax Year Updates

The IRS designates certain years as "transition years" to introduce new tax laws or adjustments that may affect taxpayers. Your IRS online account is an invaluable resource for staying informed about such changes and understanding how they may impact your tax filings and liabilities for tax years 2023 and 2024. Keeping abreast of these updates can help you plan and prepare your taxes more effectively.

Utilizing Online Marketplace and IRS Announcements

The IRS online account also provides access to an online marketplace where taxpayers can find approved tax preparation tools and services. Additionally, the platform is a primary channel for IRS announcements, offering you the latest news and updates on tax regulations, deadlines, and any changes that may affect your tax situation.

Wrapping Things Up

Opening an IRS account is probably one of the best decisions this tax season. After all, why would you spend time and energy worrying about whether or not your check was delivered or hours waiting on the phone to set up a payment plan when you can do so online? 

The IRS online account provides unparalleled convenience and access to all your most pertinent tax information. Coupling that with the fact that they have made opening an account incredibly easy, the choice becomes incredibly easy!  

Article Topics

Taxes