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Best Ways to Pay Your Taxes With A Credit Card

Deanna Rubano

March 25, 2017

 

The Different Ways You Can Pay Your Taxes

If you owe taxes to the federal government, there are several ways to make your payments. The IRS authorizes three different companies to accept payments on its behalf via debit or credit card. However, these companies are permitted to impose “convenience fees” on your payments.  We do not recommend paying your taxes with a credit card, but if you must, here are the best options we’ve found.

When you pay with a debit card, there’s a flat fee, which is currently between $2.59 and $3.95, depending on the payment processor you choose and — in the case of one company — whether your payment exceeds $1,000. After checks, paying with a debit card is the least expensive option, as the fee will always be less than $4.

When you use a credit card to pay your taxes, the fee imposed will be a percentage of the amount paid. Currently those fees range from 1.87% to 2%. In the past, these payment processors charged different fees depending on the payment network the card belonged to, with American Express cards being charged a higher fee. But more recently, each of these payment processors began charging the same fee for all cards, regardless of the payment network.  At www.pay1040.com, they have a flat fee of 1.87%/minimum $2.59  for Visa/Mastercard/American Express/Discover.  Debit card fee is $2.59.  To pay by phone: 888-729-1040.

Finally, you can always write a check and put it in the mail. This is the least expensive way to pay the IRS; there’s no fee, other than the cost of your check, the envelope and your postage. Also, the IRS will credit your payment on the date that the envelope is postmarked, regardless of when it’s actually received or cashed. This can give you an extra day or two before the funds are debited from your account, but there’s no way to predict how many.

                                            

Drawbacks of Using a Credit Card to Pay Your Taxes

It’s rarely a good idea to finance your tax liability with your credit card. If you’re unable to pay your statement balance in full, consult us about how to create a payment plan with the IRS, which will offer lower interest rates than the standard rate of nearly any credit card.

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