Paying Your Tax Bill With a Credit Card: What You Need to Know

Paying your taxes can be a major pain point for many people Between figuring out how much you owe, filling out all the paperwork, and actually getting the money together, it’s enough to give anyone a headache But what if you could simply pay your tax bill with a credit card to make the process easier?

In this article we’ll break down everything you need to know about paying your federal taxes with a credit card. We’ll cover the pros and cons fees involved, payment processors you can use, and some key tips to keep in mind.

The Benefits of Paying Taxes With a Credit Card

Using a credit card to pay your tax bill comes with several potential advantages

  • Convenience: If you have a credit card, you don’t have to send checks or money orders to the IRS. You can pay online or over the phone quickly and easily.

  • Rewards: Many credit cards offer cash back, points, or miles when you use them to make purchases. You can earn rewards by putting your tax payment on your card.

  • Floating your payment: Paying with a credit card means you don’t have to pay the balance right away. This gives you a bit more time to have the cash available to pay off your credit card bill.

  • Record keeping: When you pay your taxes with a card, you’ll have an easy record of the transaction on your credit card statement.

  • Fees that can be deducted from your taxes: Fees for processing credit card payments for business taxes can be deducted from your taxes.

The Potential Downsides

However, there are also some drawbacks to consider:

  • High fees: Credit card processors charge a “convenience fee” for tax payments which ranges from 1.87% to 1.98% of the payment amount. These fees can really add up, especially for larger tax bills.

  • Interest charges: If you don’t pay off the balance right away, you’ll start accruing interest on the amount. This can make your tax payment even more expensive.

  • Credit limit: You need to have enough available credit on your card to cover the full payment. Going over your limit for a tax payment will likely lead to fees.

  • Refunds: The IRS will refund any overpayments to your card, unless you request otherwise. This means you won’t have the option to get overpayments back as cash.

Approved Credit Card Processors

The IRS uses third-party processors to handle credit card tax payments securely. There are currently three approved providers:

  • PayUSAtax: Charges a flat $2.69 fee for debit payments or 1.87% for credit cards, with a $2.69 minimum.

  • Pay1040: For consumer debit cards, charges $2.50 flat or 1.87% . For other cards, charges 1.87% with a $2.50 minimum.

  • ACI Payments: Charges $2.20 for debit payments or 1.98% for credit cards, with a $2.50 minimum fee.

Each processor has their own website where you can make your payment. You can also call them to pay over the phone.

Key Tips for Paying Taxes With Credit Cards

If you decide to use a credit card to pay your federal taxes, keep these tips in mind:

  • Compare fees carefully – Rates and minimums vary between processors, so compare to find the cheapest option based on your payment amount and card type.

  • Understand the timeline – It takes the IRS 5-7 days to receive your payment from the processor. Don’t miss deadlines by waiting until the last minute.

  • Save records – Keep all documentation showing you made the tax payment, including credit card statements.

  • Pay early – Paying well ahead of the deadline gives you more time to resolve any potential issues with the processor.

  • Don’t forget state taxes – Federal payments go through this system, but you may need to use a different method for state taxes.

  • Have a plan to pay it off – Avoid expensive interest charges by having a strategy to pay off your credit card balance quickly.

Weighing the Pros and Cons

At the end of the day, whether or not paying your taxes with a credit card makes sense depends on your specific situation. The convenience and potential rewards do make it an appealing option for some taxpayers. But if you’ll struggle with the fees or don’t have a plan for paying off the balance quickly, it could do more harm than good.

Carefully consider both the benefits and drawbacks. Make sure you understand all the costs involved before choosing the best payment method for your needs. With the right approach, paying taxes with a credit card can be a helpful tool to make the process smoother.

Pay Tax Bill With Credit Card

Can you pay taxes with a credit card?

Yes, you can pay your taxes with a credit card. The real question, is should you?

Unlike paying your taxes with a check or automatic bank transfer, credit card payments come with a processing fee. The fee is a percentage of your tax payment that varies depending on the payment processor you choose.

There is also a maximum number of card payments allowed, based on your tax type and payment type.

Interest on unpaid balances

If you use a credit card to pay taxes, its key to pay your balance in full by the due date. Otherwise, you risk having to pay significant interest charges and even damaging your credit.

Should You Pay Taxes with Credit Card? 2024


Can I pay my taxes due with a credit card?

The IRS uses third party payment processors for payments by debit and credit card. It’s safe and secure; your information is used solely to process your payment.

How much does TurboTax charge to pay taxes with a credit card?

The TurboTax credit card fee, for example, is 2.49% if you pay income tax via credit card through its website. You can file through TurboTax and pay taxes separately through one of the above payment processors (but you’ll still be charged fees by the payment processor).

What are the payment options for the IRS?

Pay directly from a checking or savings account (Direct Pay) (Individuals only) Pay electronically online or by phone using Electronic Federal Tax Payment System (EFTPS) (enrollment required) Pay by check, money order or debit/credit card.

Can I pay IRS with Amex?

Use your American Express® Card to pay your federal, state and local taxes through ACI Payments, Inc.

How much does it cost to pay taxes with a credit card?

Fees applied for paying taxes with a credit card vary depending on the specific tax and payment processor that you use. For example, TurboTax has a convenience fee of 2.49% for credit card payments. Federal taxes can be paid with a fee of 1.82% though PayUSATax.

Can I pay my taxes by credit card?

If you do decide to pay your taxes by card, keep in mind the following processing fees for credit card tax payments. The IRS works with three payment processors to handle tax payments made via debit or credit card: PayUSAtax, Pay 1040, and ACT (ACI Payments) Payments.

Can I use a debit card to pay my tax bill?

If you have the money to pay your tax bill and still want to put it on plastic for convenience, use a debit card instead of a credit card. The three IRS-approved processors only charge fees ranging between $2 and $3.95 to pay by debit card. You can also pay the IRS directly, with no fee, by entering your bank account information.

Does a credit card charge a tax bill?

While it adds an additional fee to pay your tax bill with a credit card, you can find cards that offer rewards worth more than the fee. For example, the three processing companies accepting credit cards for federal tax payments all charge less than 2%, with PayUSAtax charging the least at 1.82%.

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