The one thing that unites united states all in paying taxes is that we all accept to do information technology. When information technology comes to filing a taxation return and paying your revenue enhancement liabilities each year, or multiple times per year in the course of estimated taxes for the self-employed, Uncle Sam provides several options for forking over the dough.

One of the less common but potentially beneficial of these is to pay with a credit card. A tax pecker presents an opportunity especially to those who play the rewards game: to earn additional points, miles or cash back—including significant welcome bonuses worth a thousand dollars or more.

Though this may sound well and good, making taxation payments with credit cards tin likewise be tricky due to payment processing fees, so you'll need to brand sure the rewards you're earning are worth more than the fees you're paying. You'll also demand to pay your credit card bill in total before the balance starts accruing interest considering interest charges will quickly negate the value of rewards earned.

Here's what you need to know most paying taxes wisely with a credit card.

Observe the Best Greenbacks Back Credit Cards Of 2022

Types of Taxes Yous Can Pay With Your Credit Card

Y'all can pay your federal taxes with a credit carte through a diverseness of payment processessors. Some states may besides let you to pay your state taxes with a credit carte du jour and yous may be able to pay property taxes with a credit carte as well.

Earlier y'all jump into making your taxation payments with a credit card, you lot should exist enlightened that the transaction will non exist free, no matter what the tax. Third political party payment processors submitting individuals' payments to the Internal Acquirement Service (IRS) charge additional processing fees for the convenience of credit card transactions and to profit from the service and comprehend the price of merchant fees. These fees are passed on to yous, the consumer. This is important to keep in heed while looking into which types of tax might be worthwhile to pay via credit carte du jour.

Can y'all pay federal tax with a credit card?

When it comes to federal taxes, the IRS makes things easy by providing information well-nigh paying a tax nib on its own website. The IRS besides authorizes three specific companies to process credit card payments for federal taxes.

The graphic below shows each of these three companies, how each accepts payment for federal tax bills and the respective fees each charges.

At that place are a few boosted details to notation near paying your federal taxes with a credit card, according to the IRS:

  • Tax payments over $100,000 may come with special requirements and these payments must be processed over the phone instead of online.
  • Different types of tax payments have a maximum number of times per year that you tin pay with a credit card.
  • Employer's federal revenue enhancement deposits cannot be paid with a credit card.

Can you pay land taxes with a credit card?

In improver to federal taxes, some states facilitate tax payment with a credit carte. This is possible for both country income taxes as well every bit business taxes, but only in states that offering these options.
Payment requirements vary depending on the state in which the taxpayer resides, equally practise the payment processors available. This also means that the cost of fees will vary.

For case, as demonstrated in the graphic below, in Indiana information technology is possible to employ the website OfficialPayments.com, which the IRS has authorized to securely process payments ranging from tuition, utilities, rent, insurance and yep, also taxes to pay country income taxes (only not business taxes) for a fee of approximately ii.4%.

Can you pay belongings taxes with a credit menu?

Though many counties and cities exercise accept credit card payments on belongings revenue enhancement, some practice non. Like other tax payments, you should accept into account that if you make up one's mind to pay your property revenue enhancement with a credit card, there will likely be a convenience fee. While weighing the pros and cons, it is advisable to contact your local tax collector's part to ostend which payment option your city or county accepts or requires.

To make a credit bill of fare payment to pay your belongings tax, you may be able to use an online portal provided by your property's jurisdiction. The website mentioned above, OfficialPayments.com, is the about common option available in states that allow tax payments to be made with a credit carte du jour. There may also be the option of paying with your card in person at your local tax collector's office.

4 Reasons to Pay Your Taxes With a Credit Card

Before deciding whether or not to pay taxes with a credit card, remember about specific reasons it makes sense for you to exercise so or non. Having a reason or incentive to pay taxes with a credit card is a must—without ane, the processing fee unnecessarily adds to your annual tax costs. If this is the case, write a check instead.

If you are weighing your options and believe you may be eligible to do good from this method, here are some of the most mutual incentives for paying taxes with a credit card:

Use a Rewards Credit Card to Earn Points or Miles

One common reason consumers pay taxes with a credit card is the reward earning potential offered past certain credit cards. While it adds an boosted fee to pay your tax beak with a credit card, it's not difficult to find cards that offer rewards worth more than the fee.

For case, the three processing companies accepting credit cards for federal tax payments all accuse less than two%, with PayUSAtax charging the least at 1.96%. With that in listen, it'south important to cull a carte (or cards, if an earning cap exists) that offers more than than i.96% cash back—or the equivalent of that in how you individually value your rewards, points or miles.

Even without having to consider the value of various rewards points, yous tin can consider applying for a carte that earns a solid rate on purchases like the Citi® Double Cash Bill of fare or Alliant Cashback Visa Signature Credit Card*

While paying 1.96% on a taxation bill to earn 2% to 2.v% dorsum may non seem worth the effort, with enormous tax bills even a fraction of a percentage of turn a profit tin can add upwardly fast.

Imagine for a moment someone owes $l,000 in federal taxes this year and pays a fee of 1.96% to use a rewards credit menu that earns 2% dorsum. In this hypothetical, $20 worth of rewards could be earned. This may not be compelling to someone paying $l,000 per year in taxes, but if it's also more user-friendly than writing a check, it'south simply a bonus.

Keep in listen that some points are worth considerably more than others. For example, let's imagine the same person from the example above paid ane.96% on the same $50,000 with The Blue Business® Plus Credit Menu from American Express (Terms use. See rates and fees), which earns two Membership Rewards points per dollar on everyday business purchases such every bit office supplies or customer dinners up to the first $fifty,000 in purchases per year, and then i bespeak per dollar on all other purchases. This taxation payment would net 100,000 Membership Rewards points for a fee of $980. Those 100,000 Membership Rewards points tin can be worth well over $2,000 in value, depending on how they are utilized.

Score a Huge Welcome Bonus

Earning ongoing rewards with a credit card for everyday spending is smart, but what about the possibility of earning a huge welcome bonus by meeting a minimum spending threshold? With a substantial revenue enhancement bill, it may exist possible to earn even more one welcome bonus, which could result in hundreds or thousands of dollars of return value.

Paying a $4,000 federal taxation bill via credit bill of fare could earn the welcome bonus from the Hunt Sapphire Preferred® Carte, which provides new cardholders with the opportunity to earn 60,000 bonus points later spending $4,000 on purchases in the first 3 months from business relationship opening. The bonus minus fees for using a card to make the payment is a overnice incentive.

Information technology would also exist possible to earn the welcome bonus on the Capital One Venture Ten Rewards Credit Carte du jour: 100,000 bonus miles subsequently spending $10,000 on purchases within the first 6 months of account opening. Plus, for a express time, receive upward to $200 back in statement credits for holiday rentals charged to the account within the first yr.

By splitting a tax bill across two rewards credit cards, information technology'south possible to earn a bank of travel rewards with but one expense—a necessary expense plus nominal fees that may be worth information technology. Call back that these bonuses are doled out on pinnacle of the rewards earned for everyday spending—cards with high greenbacks back or points spending may still earn points in addition to the welcome bonuses when used to pay tax bills.

Remember that different types of tax payments come up with a maximum number of payments allowed each year—though it may be possible to rotate between different payment processors to increment the number of payments y'all tin can make.

Avoid Interest for a Twelvemonth or Longer

For those looking to secure a short-term loan without paying interest, paying taxes with a credit bill of fare tin make sense. Only call back that a fee applies any time someone pays taxes with a credit card—and that introductory 0% April offers don't last forever.

Imagine receiving a $7,000 federal taxation neb, merely not having plenty greenbacks in the bank to cover it. In this case, it may be advantageous to apply for a card like the Chase Liberty Unlimited® which grants cardholders a 0% introductory APR for 15 months from business relationship opening on purchases and balance transfers, and so a variable Apr of fourteen.99% - 23.74% applies.

At the moment, this card is offering the ability to earn a welcome bonus 1.5% cash back bonus on everything bought in the starting time year as a cardholder on upward to $20,000 in spending - that's worth up to $300 cash dorsum in the first year. Cardholders volition also earn rewards: five% cash back on travel purchased through Chase Ultimate Rewards®, iii% cash back on eligible dining and drugstores and 1.v% on all other purchases.

If a new cardholder is able to use information technology to pay a $7,000 federal tax beak, the minimum spending requirement would immediately be met. That would result in earnings of $305 in rewards from the welcome bonus plus those from the 1.v% cash dorsum. With PayUSAtax, a 1.96% fee would be charged (comes out to $137.20). After accounting for the fee, $167.lxxx in rewards would exist left with this strategy, and the card's remainder would be subject area to the introductory Apr offer.

Equally with whatever 0% Apr strategy, stay mindful and avoid beingness seduced past a false sense of security. When the 0% Apr period ends, the interest charges volition start racking up quickly.

Even though this is possible, it's always a better thought to prepare aside money for tax payments as you become so you're not stuck in a lurch during tax season.

Run across an Important Spending Threshold

There are besides some scenarios where information technology makes sense to pay taxes with a credit card in society to reach an important spending threshold, and these instances aren't limited to earning credit carte welcome bonuses. Information technology may be worthwhile to spend a certain corporeality of money to reach the next level of elite status with a hotel credit card or an airline credit carte du jour, for instance.

Take the United℠ Explorer Card, for case. This carte offers consumers a welcome bonus: 50,000 bonus miles subsequently spending $3,000 on purchases in the first 3 months the account is open up. Interestingly plenty, this carte du jour also grants 500 Premier Qualifying Points (PQP) for every $12,000 in net bill of fare spending in a agenda year, up to a maximum of 1,000 PQP.

Cardholders who are a few PQP short of earning aristocracy condition might be able to get over the border past paying a tax beak. Depending on how valuable the benefit is, the fee required may exist worth information technology.

Many cards have spending thresholds for an annual do good.

You Can Pay Taxes With Your Credit Bill of fare, Merely Should You lot?

Nosotros've gone through the "how" just earlier paying taxes on a credit bill of fare, it's of import to focus on the "why". Hither are some points to aid you consider whether paying taxes on a credit card makes any sense for you lot:

  • Do you demand more time to pay your taxes? If you exercise, the reply may be yes no matter what other considerations come into play. This is especially truthful if you lot have a 0% APR offering that you tin can utilize to buy some extra time. The fee you pay for using plastic payment may seem tiny compared to a tax penalty or a high interest charge per unit.
  • What rewards will you receive? If you lot have a card paying a 2% or more in rewards, you will at to the lowest degree break even with most of the services that handle credit bill of fare payments. Even if the amount of rewards earned over the fee isn't notable, you may savor the additional convenience.
  • Do yous take a big minimum spend requirement to come across to earn a welcome bonus? If y'all have a card that has a large spending requirement, it might exist worth knocking out a large amount of that spending in one go, even if at that place are fees involved. Missing out on the welcome bonus volition cost yous much more than the fees charged.
  • Are in that location any other spending-based cardholder perks that y'all are close to earning? If yes, this is an easy way to tip yourself over the edge.

What Is the Fee for Paying Taxes with a Credit Carte?

One of the main reasons for opting out of paying taxes with a credit card is the processing fees information technology incurs, which, depending on your personal state of affairs and which cards you accept, may or may not be worth it. If you lot prioritize earning points and optimizing your credit card'southward reward program, you may be able to come out ahead of the processing fee.

Fees applied for paying taxes with a credit card vary depending on the specific taxation and payment processor that yous employ. For example, TurboTax has a convenience fee of 2.49% for credit menu payments. Federal taxes tin exist paid for as low as 1.96% though PayUSATax. The ability and toll to pay state taxes with a credit card varies significantly from state to state.

If you're thinking about using a credit menu to pay any of your taxes, information technology's wise to confirm specific fees with your local tax collector likewise as the payment processor y'all'll be using well ahead of time.

Best Credit Cards for Tax Payments

Information technology's easy to see how it's possible to come up out ahead by paying taxes with a credit card, merely it's crucial to choose the right credit card to practise so. There's nothing wrong with going after a few large welcome bonuses, but information technology'southward also okay to focus on accruing ongoing rewards. And allow's not forget about the potential to avert involvement on your tax pecker for a yr or longer.

Here are some of the best credit cards to use for tax payments with all those goals in mind.

For the Welcome Bonus

The Platinum Menu® from American Limited
Chase Sapphire Preferred® Card

Read More than: All-time Credit Carte du jour Bonuses for New Cardholders

For the Ongoing Rewards:

The Bluish Business organization® Plus Credit Card from American Express
Citi® Double Cash Card

For 0% Introductory Apr:

Capital I Quicksilver Greenbacks Rewards Credit Carte
Chase Liberty Flex℠

Read More: All-time 0% APR Credit Cards

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Benefits of Paying Taxes with a Credit Card

The selection to pay taxes with a credit carte undoubtedly has its conveniences. The security of a credit card payment takes abroad the pressure around tax season to immediately come up with the verbal amount of cash by deadline. Taxes tin also easily add up in a short flow of time to create large enough spending amounts that earn rewards and points quickly. This is extremely beneficial for card members who travel for business or prioritize advantage fellow member perks when traveling or making purchases through merchants that participate in a card's rewards program.

iii Pitfalls to Avoid If You Pay Taxes With a Credit Card

Paying taxes with a credit card can definitely be worth it, merely for those who aren't conscientious, it tin can lead to financial wreckage. Hither are 3 major pitfalls to watch out for whatsoever fourth dimension using a credit card for a big buy seems to exist worthwhile.

Astronomical Interest Charges

The average credit card charges an Apr over 17%, which is considerably higher than with other types of loans. That's why, more often than not, it's important to only pay taxes with a credit menu when there's cash in the bank to cover the bill in full. Whatsoever interest charges accrued will quickly negate the value of rewards earned. The all-time rewards credit cards often accept involvement rates fifty-fifty college than the average.

Long-Term Debt

Life happens. A lot tin go incorrect in the short corporeality of time between paying taxes with credit and the credit bill of fare bill arriving in the mail. Avoid long-term debt past having an emergency fund to cover a sudden loss in income, a surprise medical beak or an emergency home repair.

0% Apr Offering Expiration

There's cipher incorrect with taking advantage of a 0% APR credit card, but retrieve that these offers are only good for a limited time. Have a plan in place to pay off all charges, including tax payments, before the credit bill of fare's introductory offer ends and the rate resets to a much higher variable rate.

Bottom Line

The idea of paying off taxes with a credit bill of fare is certainly convenient. That might indeed be the case for many of us if nosotros're not careful virtually tracking subconscious fees, unexpected charges or late penalties. Some cards too may simply not offer a loftier plenty rewards bonus or cashback incentive in order to justify the costs of this convenience.

That said, as with anything regarding your pocketbook, at that place is a smart and conscious fashion to play the game to your own benefit. Equally long as you do the right research, weigh the pros and cons with enough information and stay on top of payment deadlines and accumulative automatic fees, you may very well be able to gift yourself some extra points and perks next tax season.

Frequently Asked Questions

Tin can I pay my taxes in installments?

Aye, it is possible to request an installment agreement through the IRS if yous believe you volition be unable to pay your taxes in total past the required borderline. This is a payment plan canonical by the IRS that allows for either short term or long term installments to be paid. It is of import to remember that the longer a payment plan, the more yous may incur in interest and late payment penalization fees.

You tin besides pay your taxes throughout the year ahead of time by making estimated revenue enhancement payments—which are required for the self-employed. If you have trouble setting away money throughout the twelvemonth to pay at revenue enhancement time, consider making regular payments each quarter instead.

Tin I write off credit card payments?

In curt, businesses have the pick of writing off or deducting credit card fees and payments incurred on company cards for business purposes. Businesses tin can besides deduct processing fees when using a company credit or debit menu to pay taxes. Individuals, in general, cannot deduct expenses on credit cards for personal use.

Should y'all pay taxes with a credit card for points?

This actually depends on how many points the specific taxation payment will earn you, and whether the value of those points outweigh the processing or convenience fees incurred for this type of payment. The thought of paying the IRS with your credit carte and having a manner to besides earn dorsum points is a fun one, only information technology does crave caution and weighing fees wisely.

Read More than: The six Best Tax Software Programs

To view rates and fees for The Platinum Carte du jour® from American Limited please visit this page .

To view rates and fees for The Blue Business® Plus Credit Bill of fare from American Express please visit this page .