Paying your taxes with your card can cost you more, read how!
Pay your taxes but not with your credit card. Banks are smarter than you think or know, and the IRS will allow you to do it. As you might know the IRS (Internal Revenue Service) is the nation’s tax collection agency. They would allow you to pay your tax using your credit card but this process might cost you more than paying it with your debit card.
How Does Paying Taxes with a Credit Card Cost You More?
#1 When you pay your taxes with your credit card there is tax fee. This fee is usually over 2% and it is not worth it if you can pay you taxes in full using you bank.
If you’re thinking you might earn reward points for paying your taxes, credit card companies usually offer rewards on purchases and spends on dining, gas, etc. Check with your credit card company if they offer any rewards on paying taxes and also ask them how much fee they would charge for paying your tax with the card.
#2 Too high a credit card balance may drop your credit score. This is not a direct extra money that you pay but a decline on your credit score could increase your interest rates and then it would be that you are paying extra if you do not clear the whole balance in one go when the bill arrives that month.
#3 When you carry a balance forward you accrue interest as you know. So this way you end up paying more. Incase you take longer than a money you continue to accrue interest and then end up paying extra eventually.
What Can You do if You can’t Pay your Tax in Full in One Go?
Getting your taxes done as early as possible is the best thing to do, however in case you do not have the funds to pay your taxes in full in one go you must contact the IRS and ask them if you can get on a payment plan. A payment plan for taxes might help you pay you tax amount over the course of a few months.
We hope the information provided here is going to be helpful for you. Yes, again, try not to use your credit card to pay you taxes and make sure to contact the IRS before the 18th of April if you would like to discuss getting on a payment plan to pay you taxes. It could be that you might not have to pay the extra fee. Let’s hope so!