Can You Pay Taxes With a Credit Card In 2017?

During tax time you may be asking how to do this, but what you should be asking is if it even make sense to do so?

Yes, debit and credit card tax payments are possible — and possibly more convenient for you. But the IRS is not the one that directly processes your credit card payments. Rather, third-party intermediaries do it and charge a fee for it.

Here’s a quick fee comparison, which we have updated for 2017 (tax year 2016): (World Pay, Inc)
Fees – 1.98% when paying with credit card, $2.65 flat fee when paying by ATM/debit card
Cards Accepted – MasterCard, Visa, Discover, American Express

Link2Gov Corporation
Fees – 1.87% when paying with credit card (minimum of $2.59), $2.59 flat fee when paying by ATM/debit card
Cards Accepted – MasterCard, Visa, Discover, American Express

Official Payments Corporation
Fees – 2% when paying with credit card ($2.50 minimum), $2.25 flat fee when paying by ATM/debit card
Cards Accepted – Visa, MasterCard, Discover, American Express

If you’re using tax software (like TurboTax), it will have credit card fees as well — not for the cost of the service itself, but for any tax payments you make via the service.

When it does and does not make sense…

If you want to pay federal taxes with a credit card for points, rewards or cash back, as you can see it probably won’t make sense since the minimum you will be paying is 1.89 percent. That said, here are some credit cards that give 2 percent rewards. With those not only will you break even, but you will also come out a little bit ahead.

However, there’s one scenario in which paying taxes with a credit card could make sense from a rewards perspective — if you’re trying to earn a sign-up bonus and your regular spending isn’t enough. Some cards may offer, for example, 50,000 or more rewards points if you spend $3,000 within the first three months of opening the account. If you have a sizeable tax bill, it could help you make the spending threshold. Because sign-up bonuses let you earn far more points than usual, you could still come out ahead, even with credit-card fees.

If you can’t pay your tax payments in full…

Now if you’re interested using a credit card for taxes simply because you have no choice (as in, you can’t afford to pay cash), it might make sense in certain situations. Depending on your interest rate and the IRS late payment interest rate (which changes all the time), it could be worthwhile as a last resort.

If you’re going down this road, you may want to consider getting a new credit card that has a 0 percent offer for purchases and then using that to pay your taxes. That way, there’s the potential of saving money on interest. For the best credit cards that do this, check out these balance transfer deals
Updated Jan. 23, 2017

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I wish the fees weren’t so high, because then I would definitely pay my taxes using American Express to earn some cash back.