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Can I Pay My Taxes with a Credit Card?

paying taxes

As the holiday haze starts to lift and spring begins peeking over the horizon, the realities of being in a new fiscal year start to hit us all — right in the pocketbook. Somewhere between Valentine’s Day and Easter, the commercials for tax preparation providers take over the airways, and we start keeping watch for the W2s and 1099s soon to be hitting our mailboxes.

For some consumers, tax time is to be celebrated, bringing with it income tax rebates and refunds that can mean an extra check in the mail. But the US Tax Code is a complex document, and not every consumer comes out ahead; anything from claiming too much during the year to not setting aside enough of your self-employment income, there are dozens of reasons you may end up owing the IRS come tax season.

Methods of Paying Your Tax Bill

If you owe money on your federal or state income taxes, you have a few options for repayment. The cheapest method — and by cheap, we mean free — is to use a direct debit payment, which transfers the money directly from your bank account. This method is available through the IRS website or most third-party tax prep services and won’t have any additional fees.

Another payment option is to use a credit card to pay your tax bill. Unlike direct debit, however, using a credit or debit card to pay for your taxes isn’t free; the service is provided by third-party payment processors, and the processor will charge a convenience fee to handle your payment. Typical fees for credit card payments will be a small percentage of your total payment amount, with rates ranging between 1.87% and 1.99%.

Deciding Which Credit Card to Use

Once you’ve decided to use a credit card to pay your tax bill, you’ll need to determine which credit card to use. If you intend to pay off the charges right away, a quality rewards credit card may be the way to go, as they can help recoup some of the convenience fee. For example, if you use a cash back credit card that offers 2% cash back on all purchases, you can break even — or even come out a little ahead — on the cost of paying with your card.

If you may need longer to repay your balance from a tax bill, however, your focus should be on a credit card with a low APR or introductory 0% APR offer. The lower your APR, the less you’ll be charged in interest fees for carrying a card balance from month to month. If you’ll need longer than a credit card offer can provide to repay your balance, consider obtaining a personal loan or working out a payment plan with the IRS.

To figure out which card to use to pay your taxes, you can check out the best credit cards for your situation using a comparison site like CardRates.com. Doing a little research before signing up for a new credit card can not only help you find a card with rewards and benefits you’ll really use, but can also limit the chances your application will be rejected. For example, if you know your credit score isn’t quite in the “excellent” range, then you can avoid cards that cater to that specific credit demographic and would be likely to turn down your application.

If you are struggling to pay your bills on time or are behind on payments, we do not recommend using a credit card to pay for your taxes or opening a new credit card account. There are better options and payment plans you can get. For help coming up with a budget that works for you and a plan to tackle your debts, contact an NFCC member agency.

Byline: Ashley Dull is the Finance Editor at Digital Brands, Inc., where she oversees content published on CardRates.com and BadCredit.org. Ashley works closely with experts and industry leaders in every sector of finance to develop authoritative guides, news and advice articles with regards to audience interest. 

*Views expressed are the personal views of the author, and do not necessarily represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

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