When it comes to paying taxes, many people find themselves strapped for cash. If you’re one of them, you can use a credit card.
The Taxpayer Relief Act of 1997 allowed the Internal Revenue Service (IRS) to accept credit cards as a form of payment.
Rewards From Credit Card
There are a number of benefits to using a credit card to pay taxes, not the least of which is convenience. You might be able to earn points and miles while you pay your taxes with a rewards credit card, and you could even be able to utilize taxes to help you meet the minimum spending criteria for a welcome bonus.
If you don’t truly have the money to pay the taxes owed to your state or the Internal Revenue Service, paying with a credit card may buy you some time (IRS).
Using debit or credit cards, you can pay your taxes online or over the phone. This is a quick and secure way to fulfill your tax obligations. Which taxes may you pay with a card?
Taxes for individuals:
- Form 1040
- Form 4868
- Form 5329
- Trust Fund Recapture Penalty
- Business Taxes:
- Form 940
- Form 941
- Form 943
- Form 944
- Form 945
- Form 1041
- Form 1065
- Form 2290
However, there is one significant issue you will encounter if you attempt to pay taxes using a credit card: the costs you will be required to pay. Depending on where you live, fees for state taxes can vary, but for your federal tax payment, the surcharge will range from 1.87 percent to 1.98 percent.
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Pay Your Tax Bill With The Right Card!
Even once you take into consideration the additional cost of using a credit card to pay your tax payment, there are still some benefits to be enjoyed.
The key is to ensure that you use the appropriate card for paying taxes and for the appropriate purpose when paying your tax payment.
The costs that must be paid upfront are the biggest disadvantage of paying taxes with a credit card. Additionally, if you have a balance, you’ll have to pay interest, which can make your tax bill much more expensive than it has to be.
Make sure you’re doing it for a specific reason and with a strategy in mind before paying taxes with a credit card. Only use it to pay taxes if you will benefit from doing so and have a strategy for paying off the balance.
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