Can I pay IRS with a credit card?

Tax season is approaching and you’re a little short on funds. You’re wondering whether you can pay the IRS with a credit card. The short answer is yes, credit cards can be used for paying taxes. The long answer is, you should consider a variety of factors before making a decision. Here’s what you need to know. 

How do I pay the IRS with a credit card?

The process itself is actually quite simple. You can pay the IRS through phone, mobile, or online. If you choose online, just log onto the IRS payment page, click on ‘pay your taxes now’ and select credit/debit card as your payment method. For the phone, call the IRS number and tell them you want to use a credit card. 

How much does the IRS charge to pay with a credit card?

If you use a payment processor: 

• PayUSATax: 1.96% fee, with a minimum fee of $2.69 
• Pay1040: 1.87% fee, with a minimum fee of $2.59 
• OfficialPayments: 1.99% fee, with a minimum fee of $2.50

These processors accept all major card providers, although there are some variations.

If you use an IRS integrated e-file system: 

• Pay1040.com/SpecialOffers/TurboTax: 2.49% with a minimum convenience fee of $3.95 
• 1040paytax.com: 2.35% with a minimum convenience fee of $3.95 
• FileYourTaxes.com: 3.93% with a minimum convenience fee of $2.00

If you use a third-party tax filing service like H&R Block, you will have a similarly high rate. H&R block charges a 2.49% fee. 

Should I pay my taxes with a credit card? 

Paying with a credit card definitely has its fair share of pros and cons. 

Pros

1. It buys you time to pay off your taxes
2. You can get rewards if you have a rewards credit card 
3. You could meet a spending bonus limit for a rewards credit card, earning you lucrative benefits 

Cons

1. There are high fees associated with credit card payments, making your tax bill even heftier 
2. The fees levied could exceed the rewards you earn as most rewards points on taxes will range from 1-2%
3. Your credit score can be negatively affected, as your credit utilization will greatly increase and could be pushed too high
4. If you don’t pay your credit card balance in full when you get the statement, you could be charged interest on your tax payments, leading to debt 

Conclusion 

Therefore, it is generally not advisable to pay taxes on your credit card. However, if you are really strapped and intend to pay off your balance, it is advisable to pay your taxes on a credit card with a long introductory 0% APR period. This way, you will buy time to pay off your taxes but will not be charged interest in the long term. Credit cards like the Chase Freedom Unlimited and Citi Double Cash Card are good options for this. Alternatively, you could also balance transfer money from one card to another with a lower interest rate, but you will generally be charged balance transfer fees for this.