We can pay taxes with our credit card if we really want to. On the internet, there are several websites that can show you the procedures to follow if you pay taxes through the internet. The Internal Revenue Service even has a website that guides taxpayers on how to pay taxes using a credit card. Some States like California and Pennsylvania have their own websites that dwell on the same topic of how to pay taxes with a credit card.
The real question is: do you really want to pay taxes using your credit card?
You Pay High Interest Charges
Credit cards are noted for the high interest rates they charge on the cardholders. If your credit card is one of those that cost less than 10% per year interest, paying your taxes with that card may be feasible. You must remember that when you pay taxes with a credit card, you have to pay a processing fee of around 2% that is charged by the service provider and this adds more to the high interest that you incur when you use your credit card.
Consider the Other Options Available
If you don’t have sufficient funds to pay for your taxes, it may be wise for you to look for alternative financing. Perhaps asking your relatives and friends to lend you money is a better option than using your credit card to pay your taxes. You can also refinance your home mortgage to raise enough funds to pay your taxes. The simplest way is to get in touch with the IRs and ask that you be allowed to pay your taxes on installment. You can also check if you are qualified to submit an Offer In Compromise that could lower your taxes which you have to pay in 60 -120 days. Another option is to ask for additional time for you to pay your taxes. You can use the Online Payment Agreement application for this or you can even phone the IRS directly.
Taxes that Can be Paid using a Credit Card
Generally, Federal and State taxes can be paid through credit cards. Federal and State personal income taxes, property taxes, Federal and State business taxes can all be paid through your card. You have to check which cards are acceptable in your State and which cards are allowed by the IRS.
Advantages of paying taxes with a credit card
There are some advantages when credit cards are used to pay taxes. You will be paying online so your privacy and security are taken care of. There is little chance of errors to be made since you can easily correct the entries. Your payment is immediately effective as soon as the amount is charged on the card and the IRS can acknowledge receipt of your payment within two days. If you are entitled to a refund, you can receive it after two weeks. You can save valuable time and effort by preparing and paying both your State and Federal returns at the same time.