It’s tax time, and you’re about to send money to Uncle Sam. How will you pay?
When you owe the IRS, it gives you plenty of ways to pay your tax bill, from its proprietary Direct Pay to electronic withdrawals and even cash payments.
How about credit cards? The answer is yes, you can use plastic to pay your IRS bill — as long as you pay through one of the IRS’ three approved payment processors.
A credit card isn’t your cheapest option: You’ll pay about a 2% fee per payment. However, paying with a credit card could come with specific benefits that we detail below.
Why you should — and shouldn’t — pay taxes with a credit card
Before paying your taxes with a credit card, weigh the benefits and potential drawbacks.
Paying with a credit card could be helpful if you …
- Need time to pay off your taxes. If you face a big tax bite, you don’t have to pay it all right away. By putting it on your credit card, you can pay it off over a longer period.
- Want to reach a minimum spend for a signup bonus. Minimum spends on signup bonuses are usually a few thousand dollars. Reach yours more easily by paying your taxes with your credit card. Just make sure that the IRS’s processing fee doesn’t erase what you’d gain from your bonus.
- Have a credit card with a long 0% intro APR period. If you put your taxes on your 0% APR card, you can effectively defer your payments. Instead of putting your money toward taxes immediately, you can let it grow in a savings account, money market account or certificate of deposit.
Avoid paying your taxes with a credit card if you …
- Have trouble keeping up with payments. It’s rarely a good idea to rack up a lot of debt on your credit card without paying it off soon. If you plan on paying only the minimum toward your balance each month, consider passing on a credit card tax payment. You’ll quickly accumulate interest that could balloon your debt.
- Need to keep an eye on your credit score. Putting a big charge on your credit card will raise your credit utilization ratio, which could put a dent in your credit score. If you’re looking to open a line of credit soon — such as a mortgage, car loan or credit card — it may be wise to avoid more debt right now.
Consider an installment agreement
If you’re paying taxes via credit card because you can’t pay your tax bill all at once, consider an installment plan. This is an agreement with the IRS that lets you pay your tax debt in monthly payments.
To begin an installment plan, you must file your tax return and owe $50,000 or less in taxes, penalties and interest.
How to pay taxes with a credit card
- Visit the IRS online to see the list of approved payment processors.
- Select a processor, and visit its website.
- Choose which tax filing status you’re paying for.
- Enter your name, Social Security number, address and contact details.
- Submit your billing details, including your credit card information and billing address.
Note that not all IRS taxes are eligible for payment by credit or debit card, and the IRS could limit how often you can make payments with a card. See the IRS’s Frequency Limit Table by Type of Tax Payment for more information.
What fees will I pay?
The IRS offers three approved processors, each of which charge similar fees for credit card payments.
| Processor | Credit card fee | Minimum fee |
|---|---|---|
| Pay USA Tax | 1.98% | $2.69 |
| Pay 1040 | 1.87% | $2.59 |
| Official Payments | 2% | $2.50 |
Here are the fees you’ll pay depending on the size of your tax bill.
| How much you owe | Approximate credit card fee |
|---|---|
| $500 | $10 |
| $1,000 | $20 |
| $2,500 | $50 |
| $5,000 | $100 |
| $7,500 | $150 |
| $10,000 | $200 |
| $15,000 | $300 |
| $20,000 | $400 |
Which card types are accepted by the IRS?
All of the major card networks — Visa, Mastercard, Discover and American Express — are accepted.
Using a credit card to pay rent