If you owe money, it'll be withdrawn from your account on the tax deadline. If you are planning to pay your bill in one sum, the IRS and state will use the account and routing number you provided on your return to deduct the funds on tax day. If they aren't able to do so due to incorrect details or a low balance, they’ll reach out via mail.
If you are looking to pay your balance monthly, you can choose the "Pay later" option where you'll need to set up a payment plan directly with the IRS and your state - more on this in the next section below.
The IRS charges low-interest rates of 0.25% monthly when you set up an installment agreement. This is lower than most credit cards that charge an average of 20%+.
It's a common misconception that most people expect to be heavily penalized if they don't pay their taxes on time. In reality, there are hefty penalties if you don't file (5% per month). The IRS doesn't want to chase people and would rather they at least file and then figure out a way for them to pay the bill. Users are much better off if they file and then sign up for a payment plan as opposed to avoiding filing all together because they currently can't afford their tax bill.
Here are IRS resources with interest rates:
- Failure to file penalties: https://www.irs.gov/payments/failure-to-file-penalty
- Failure to pay penalties: https://www.irs.gov/payments/failure-to-pay-penalty