Can I pay my federal taxes 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.
It's convenient — file early and make a payment by debit/credit card later. The payment date will be the date the charge is authorized. Need an extension? If you pay part ($1 minimum) or all of the tax you estimate you will owe using a debit/credit card, you will not need to file an extension form, such as Form 4868.
The biggest perk of paying your taxes using a credit card is the rewards you'll earn. For instance, if you're paying $1,000 in taxes using a flat-rate 2% cash back credit card, you'll earn $20 cash back. But depending on the processing fee, you may barely break even because the fee ranges between $18.50 and $19.80.
It's always in your best interest to pay in full as soon as you can to minimize the additional charges. Paying electronically is a convenient way to pay your federal taxes online, by phone for EFTPS: The Electronic Federal Tax Payment System or card payments, or digital wallet, or from a mobile device.
Credit card interest is not deductible on income taxes. The personal interest deduction was eliminated in the Tax Reform Act of 1986. Interest payments on home loans, student loans, and investment property may be tax-deductible. Personal expenses cannot be deducted as business expenses.
Professor's Take: “The consistent downside of paying a tax liability with a credit card is the processing fee, often around 3% of the balance. But this downside can be offset through rewards offered by the credit card company, and low or 0% interest offers.
If you are required to pay by electronic funds transfer (EFT), you cannot make your tax or fee payment by credit card. This is because the law specifically defines the electronic funds transfer payment as ACH Credit, ACH Debit or Fedwire. Credit card payments are not included in the definition of the law.
What to consider before paying the IRS with a credit card. If you have a tax liability that you can't pay in full, using a credit card may not be your best option. With average credit card interest rates being around 16%, paying with a credit card could mean additional interest on top of your tax bill.
If you can't afford to pay your taxes, you may be able to qualify for an installment plan with the Internal Revenue Service (IRS). An installment plan allows you to pay your taxes over time while avoiding garnishments, levies or other collection actions.
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 is the smartest way to pay taxes?
Set up a payment plan
If paying your entire bill upfront isn't an option, the IRS offers several types of alternatives – like monthly payment plans (called installment agreements). And the penalties and interest the IRS charges on your tax balance may not be as high as you think.
IRS Direct Pay
IRS Direct Pay is one of the simplest and most affordable options for tackling a tax bill. You can access the free service through the IRS Direct Pay website to submit a payment directly from either your checking or savings bank account.
Direct Pay (individuals)
Use this secure service to pay your tax bill or make an estimated tax payment directly from your checking or savings account at no cost to you.
The IRS page explaining credit card payments says you can only use debit or credit cards to make up to two payments per tax period (year, quarter, or month, depending on the type of taxes you're paying), but that means you could use two different cards to make two different payments.
Generally, you can pay your mortgage loan with a credit card, but it's not as simple as paying your mortgage lender directly through your credit card company. Most mortgage lenders won't accept mortgage payments from a credit card because they would be required to pay transaction fees.
Three Ways to Pay
Pay your taxes online at www.eftps.gov, over the phone, or through your tax professional, payroll service, or financial institution.
FAQS about credit card payments and taxes
If you use your credit card to pay your tax bill, you don't have to worry about paying added cash advance fees or a higher cash advance APR. The transaction is counted as a retail purchase, not a cash advance, so you'll pay the normal purchase APR without added fees.
Share: If you've chosen to use a credit or debit card to pay for your online tax prep, please note that H&R Block filing fees will be charged at the time you complete the transaction in the product.
Taxes are pay-as-you-go. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. There are two ways to pay tax: Withholding from your pay, your pension or certain government payments, such as Social Security.
You can pay online, by phone or with the IRS2Go app. You can view your options at IRS.gov/payments.
Can not paying your taxes hurt your credit?
The IRS doesn't report information to the credit bureaus and not paying taxes won't hurt your credit scores directly. However, the IRS can take out tax liens on your property and force you to pay the money, which could affect your ability to pay other bills and qualify for new credit accounts.
While the IRS doesn't accept credit card payments directly, it works with intermediaries that will process your payment. Through these services, you can pay with Visa, Mastercard, Discover and American Express. You can also pay via digital wallets such as PayPal and Click to Pay.
One of our safe, quick and easy electronic payment options might be right for you. If you choose to mail your tax payment: Make your check, money order or cashier's check payable to U.S. Treasury. Please note: Do not send cash through the mail.
| Tax debt | Minimum monthly payment |
|---|---|
| $10,000 or less | Sufficient amount to pay off your debt in less than 3 years |
| $10,000 to $25,000 | Total debt divided by 72 |
| $25,000 to $50,000 | Total debt divided by 72 |
| More than $50,000 | No set minimum |
For individuals who establish a payment plan (installment agreement) online, balances over $25,000 must be paid by Direct Debit. See Long-term Payment Plan below for other payment options.
