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When you owe the IRS, it gives you plenty of ways to pay your tax bill. But can you pay taxes with a credit card? The answer is yes — as long as you pay through one of the IRS’s 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, too.
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.
All of the major card networks — Visa, Mastercard, Discover and American Express — are accepted.
The IRS offers three approved processors, each of which charge similar fees for credit card payments. Here are your options and their associated fees as of this writing.
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 |
Before paying your taxes with a credit card, weigh the benefits and potential drawbacks.
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. You can choose between a short-term plan that lasts 120 days, or a long-term plan that lasts more than 120 days. While you’ll still accrue interest on the balance, it’s typically less than the APR on most credit cards — so it may be a more prudent option in the long run.
To begin an installment plan, you must file your tax return and owe $50,000 or less in taxes, penalties and interest.
Yes, you can pay quarterly taxes using a credit card. This would apply to people who don’t automatically have tax withheld from their income, such as freelancers and self-employed individuals.
The same pros and cons generally apply. However, one unique perk associated with paying your quarterly taxes via credit card is that “United States Treasure Tax Payment” will be included on your statement — proof that you’ve paid, in addition to the confirmation number.
Make sure to weigh the benefits and drawbacks of using a credit card to pay for taxes to make sure it’s financially worth it. If you like the idea of racking up rewards, then compare rewards credit cards to find a welcome offer that pays off in the long run. Otherwise, find a credit card that can help you pay your taxes while meeting your financial needs.
Pictures: Getty Images
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