[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/passive-income\/cash-back-and-rewards\/credit-cards\/pay-taxes-with-credit-card\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/passive-income\/cash-back-and-rewards\/credit-cards\/pay-taxes-with-credit-card\/","headline":"How to Pay Taxes with Your Credit Card and Come Out Ahead","name":"How to Pay Taxes with Your Credit Card and Come Out Ahead","description":"Tax time tends to come around more quickly than many of us like to...","datePublished":"2020-02-12","dateModified":"2025-03-18","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/ashley-sutphin-watkins\/#Person","name":"Ashley Sutphin Watkins","url":"https:\/\/moneydoneright.com\/author\/ashley-sutphin-watkins\/","identifier":60,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/d7ed67c6901210e47bcba4a6963591eda262f239ba4608acb8908580b17a8c03?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/d7ed67c6901210e47bcba4a6963591eda262f239ba4608acb8908580b17a8c03?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/pay-taxes-with-credit-card.jpg","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/pay-taxes-with-credit-card.jpg","height":460,"width":1900},"url":"https:\/\/moneydoneright.com\/passive-income\/cash-back-and-rewards\/credit-cards\/pay-taxes-with-credit-card\/","about":["Credit Cards"],"wordCount":3959,"keywords":["schema"],"articleBody":"Tax time tends to come around more quickly than many of us like to think about.The IRS filing deadline for tax returns is April 18, 2022, and this is when you\u2019ll need to make your tax payment.Even if you file for an extension — which would give you until October 15 to file your return — you will still have to pay your outstanding tax liability on or by April 18.Of course, if you’re due a refund, you don’t have to worry about any of this because your taxes have already been paid throughout the year.But if you typically don’t get a refund or you’re self-employed and responsible for making your own tax payments, and you aren\u2019t able to pay your taxes in full when they\u2019re due and filed, you may be able to set up a payment plan, but there are limitations on how often you can utilize this option.Now, if you don\u2019t file your taxes on time and don\u2019t request an extension, the IRS will charge you an additional 5% on your balance for every month you\u2019re late, up to 25%.If you file your tax returns but don’t pay your outstanding tax liability, you may also be charged a penalty of 0.5% per month by the IRS.In both cases, you will e charged interest on what you owe.These are some of the milder consequences of not filing and paying your taxes on time.Over time, the IRS can take steps, including garnishing your wages or seizing assets if you owe money, to ensure they get their due.The IRS can also put a lien on your assets.It\u2019s best to be proactive when it comes to filing and paying your taxes, and if you don\u2019t have the money to do so, there are other options, including using a credit card.If you do use a credit card to pay your taxes, there are strategies you should use to ensure you\u2019re making a smart short- and long-term financial decision.Check It Out: Here’s When Credit Card Rewards Are Taxable (and When They Aren’t).Table of ContentsToggleYour Options for Paying TaxesPros of Paying Taxes with a Credit CardCons of Paying Taxes with a Credit CardHow to Pay Your Taxes with a Credit CardFrequently Asked QuestionsThe TakeawayLearn MoreYour Options for Paying TaxesRegardless of your financial situation, there are several different ways you can go about paying the IRS.DirectPayIf you want to pay your taxes online, and you have the cash in your checking or savings account, you can use the DirectPay service on the IRS website.You don\u2019t have to pay a processing fee and you can schedule advance payments.You can also change your payments or cancel them if you need to, once you\u2019ve scheduled.To set up DirectPay, you enter your personal information and add your bank account details.You can make different types of payments to the IRS with DirectPay like Form 1040 and extension payments.EFTPS.govYou can also schedule payments up to a year in advance if you register with the Electronic Federal Payment System (EFTPS).If you need to pay estimated taxes, you can use this system operated by the Treasury Department.There aren\u2019t any processing fees charged if you use EFTPS.You have to enroll initially to use this system, but once you enter your information, you don\u2019t have to do it again every time you use it, unlike DirectPay.Check Or Money OrderYou can write a check and send it to the United States Treasury if you prefer to keep your payments offline.If you\u2019re going to send a check or money order with your tax return, you have to include Form 1040-V, which is your payment voucher.Form 1040-ES is used for estimated tax payments.Electronic Fund WithdrawalIf you have a checking account and you\u2019d like to set up a direct debit so that payments come out of it, you can do so through tax prep software, but you usually need to e-file your return.If a tax professional prepares your return, he or she can set this up for you.Personal LoanIf you\u2019re in a situation where you don\u2019t have the available cash to pay your taxes, you might consider a small personal loan.Personal loans provide you with the funds to pay the IRS.Then over time, you pay the loan back with interest.The interest rate on a personal loan may be lower than what the IRS would charge you in both interest and penalties.Yes, it stings to pay interest, but at least you won’t have to worry about the IRS garnishing your wages or putting a lien on your property.Payment PlanThe IRS does offer a payment plan option that may give you up to 120 additional days to pay what you owe.In addition to payment plans, there are installment plans, but you have to pay a small fee to set one up.The IRS will consider whether or not the burden of paying your tax bill would make it difficult for you to pay your living expenses.There are limitations to any plan offered by the IRS, in addition to the fact you\u2019ll be paying fees and interest.Credit or Debit CardYou can also pay by credit or debit card, but you have to use an IRS-approved payment processor.The IRS doesn\u2019t directly accept card payments, which is why they work with outside payment processors.There are three processors, and they charge a fee.The fee varies depending on the company you use, and if you\u2019re paying with a debit card, you\u2019ll usually pay a flat fee.If you\u2019re paying with a credit card, the fee will be calculated as a percentage of your payment.The IRS, through its payment processors, will accept all major credit cards, although you\u2019ll have to pay the processing fee which may be as high as 1.99% — which is actually lower than the 2% rewards you could earn with a credit card.Of course, if you are going to use a credit card, there are considerations to keep in mind, including the interest rate, rewards you might earn from doing so, and how that outstanding balance might impact your credit score because of your debt utilization ratio.Pros of Paying Taxes with a Credit CardThere are upsides of paying your taxes with a credit card if you\u2019re strategic in doing so.You Have More TimeWhen you pay with a credit card, it can make your tax bill more manageable.You\u2019re not stuck paying a lump sum to the IRS all at once, which may not even be feasible for you.Instead, you can ensure you pay everything to the IRS so you don\u2019t have to think about them imposing consequences on you for not doing so.You can then pay your monthly credit card bill as you\u2019re able.For some people, it\u2019s much less stressful to pay a monthly credit card bill as opposed to dealing with the IRS.You Can Earn RewardsMany credit cards offer rewards or cash back, so if you pay your taxes with your card, you can accrue these.If you have a new credit card, a large purchase like paying your taxes can help you meet spending requirements for certain welcome offers and signup bonuses.It Might be Interest-FreeDepending on the card you\u2019re able to qualify for, you might be able to pay your taxes with it and pay no interest if there\u2019s a promotion going on.It\u2019s common for cards to come with 0% introductory interest rates, and some offer that for up to 18 months.Cons of Paying Taxes with a Credit CardThere are also downsides of paying your taxes with a credit card, most of which stem from the card you choose to use.You Will Pay FeesDepending on the payment processor you use to pay the IRS, you will have to pay fees, and they can vary.It\u2019s possible, with a rewards credit card, that you could negate the impact of the payment processing fees.All of the fees for paying directly with a credit card are under 2% currently.If you have a credit card with a 2% cash back rewards structure, your rewards earnings will outweigh what you have to pay for processing.The only time this wouldn’t be the case is if you owed very little in taxes and the minimum processing fee would be more than 2% of your payment.If you are paying a lower amount in taxes, it might be better to choose the more expensive payment processor, Official Payments, because they have the lowest minimum fee.If you\u2019re paying a higher amount then going with the payment processor that charges the lowest overall rate is better because you want to pay the lowest possible percentage..simple_table-28884 table tr th{\ttext-align: center;\t\t}.simple_table-28884 table tr td{\ttext-align: center;\t\t}IRS Payment ProcessorsProcessorRateMinimum FeeCheapest Option If: 2% Rewards Exceed Fee If:PayUSATax1.96%$2.69Payment More Than $135.17Payment More Than $134.50Official Payments1.99%$2.50Payment Less Than $135.17Payment More Than $125.00Pay1040 2.49%$2.59Never Cheapest OptionPayment More Than $129.50You May Pay InterestIf you pay with a card that has a high interest rate and you don’t pay off your balance, you\u2019re significantly adding on to what you ultimately pay for your taxes when all is said and done.You Incur DebtIf you use a credit card, you\u2019re accruing debt, so you need to ensure that you\u2019re going to be able to make payments on time and that this debt won\u2019t put you in a difficult financial situation.If you aren\u2019t able to make your credit card payments on time, you could be hit with additional penalties from the card company, which will also add to your overall tax payment.How to Pay Your Taxes with a Credit CardOther than paying off your balance quickly, the most important thing to keep in mind when it comes to paying your taxes with a credit card is choosing the right card.Not all cards are created equally, and some cards are not well-suited to paying your taxes while others are.Step 1: Choose the Right Credit CardThere are three main considerations when choosing a card to pay your taxes with:Interest Rate: Credit card interest can be brutal if you don’t pay off your balance, but obviously If you choose a card with a 0% introductory APR, you can have anywhere from 12 – 21 months to raise the cash to pay off your balance.Rewards: Many cards offer cash back or travel rewards that may exceed the credit card processing fee on, so be sure to keep this in mind when choosing a card.Sign-Up Bonus: Many card companies offer appealing sign-up bonuses but you have to meet a certain spending requirement within a set time period, usually around three months after you open a new account.\u00a0 Of course, you don\u2019t want to overspend simply to meet the requirements for the sign-up bonus, which is a mistake people sometimes make. With taxes, you have to pay them anyway so you\u2019re not spending on unnecessary things, but you can still meet the threshold for the sign-up bonus.Good card options include:Capital One\u00ae Venture\u00ae Rewards Credit CardThe Capital One Venture Rewards Card gives you two miles per dollar spent on the card, and each point is then worth 1 cent when you redeem through Capital One for travel. That means your overall return is 2%, which exceeds the processing fee on all three IRS payment processors.But the real beauty of this card is its current welcome offer.\u00a0 If you\u2019re new to the card, you earn 50,000 miles if you spend $3,000 within the first three months after you open the account, and you could easily charge that much when paying your taxes.Since you\u2019re not restricted to spending in certain categories to earn the maximum miles per dollar, this card provides you the flexibility that would make it an appealing way to pay your taxes.\t    \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCapital One Venture Rewards Credit Card: Best for Simplicity\t\t\t\tBasics: The Capital One Venture Rewards Credit Card gives you two miles per dollar spent on the card.  By our math (see below), each point is worth 1 cent each when you redeem for travel through Capital One, making your return 2%.  There is a welcome offer of 75,000 miles with $4,000 spend within the first three months from opening the account, this is equal to $750 in travel.Our Math: The easiest ways to redeem Capital One Miles are to either receive a statement credit for travel purchases made on the card within the last 90 days or to book travel through Capital One travel.  With both of those options, 100 Capital One miles is worth $1 of travel, making the miles worth 1 cent each.  Note that transferring your miles to one of Capital One's airline partners could increase (as well as decrease) the value of your miles.Bottom Line: This card is a great credit card for those who value simplicity when it comes to rewards, but at the end of the day you're getting 2% rewards with a $95 annual fee.  The Citi Double Cash, on the other hand, can earn you 2% cash back without an annual fee.  That said, the Double Cash comes with a 3% foreign transaction fee.  The Venture Rewards does not have a foreign transaction fee, so if you spend more than $3,166.67 ($95\/3%) abroad per year, you would come out ahead with the Venture Rewards, assuming you value simplicity and just want one go-to card for everything.\t\t\t\t\t\t\tWelcome Offer75,000 miles with $4,000 spend within first three months from opening account. This is equal to $750 in travel.Annual Fee$95Perks\u2022 Up to $100 credit for Global Entry or TSA Pre\u2713 every four years\u2022 No foreign transaction fee\t\t\t\tCiti Double Cash CardThe Citi Double Cash provides a solid 2% cash back structure with no annual fee.You earn 1% cash back when you actually make a purchase, and then you get another 1% when you make a payment.These 2% rewards exceed the processing fee for any of the IRS’ payment options.And the icing on the cake is the card’s above-average introductory 0% APR for 18 months with ongoing APR-14.24% – 24.24% (Variable), which is one of the longest periods you\u2019re going to find with any card.\t    \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCiti Double Cash: Best Basic Cash Back CardRead Review\t\t\t\tBasics: This card essentially gives you 2% cash back on everything.  You get 1% cash back when you swipe and an additional 1% when you make a payment.Example: Excluding housing costs (which typically can't be paid by credit card), the average American household spends $35,000 per year.  If you put $35,000 annually on this card, you would earn $700 cash back.Bottom Line: While other cards may give you more rewards in certain categories like groceries or gas, this card has you covered when it comes to the bulk of your spending.  I personally use this card whenever I make a purchase that doesn't fall into a bonus category on another card.\t\t\t\t\t\t\tWelcome OfferLIMITED TIME OFFER -- Earn $200 cash back after spending $1,500 on purchases in the first 6 months of account opening.Annual Fee$0Credit ScoreGood - Excellent\t\t\t\tOur Review MethodologyCapital One\u00ae QuicksilverOne\u00ae Cash Rewards Credit CardNo, at 1.5%, the QuicksilverOne doesn’t provide as great a rewards rate as the Citi Double Cash, and it comes with a $39 annual fee.However, the Citi Double Cash can be difficult to be approved for since you need to decent credit to obtain it.The QuicksilverOne is much easier to qualify for, and it can even help you build your credit since Capital One reports to all three credit bureaus.So if you’re still building your credit and are looking to earn some cash back on your tax payment, the QuicksilverOne might be the card for you.\t    \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCapital One QuicksilverOne Cash Rewards Credit Card: Best for Less-Than-Perfect CreditRead Review\t\t\t\t\t\tLearn MoreWe earn a commission on this offer.\t\t\t\tBasics: This card gives those with less-than-perfect credit the opportunity to earn unlimited 1.5% cash back on all purchases with a low $39 annual fee.Example: If you spend $6,000 annually on this card, you will earn $90 cash back.  Netted with the annual fee of $39, you will end up with $51 back in your pocket.  Make sure you are able to put at least $2,600 on this card annually or you will earn less cash back than the annual fee.Bottom Line: While this card's benefits are nothing to write home about, and it does come with a (small) annual fee, it is the best cash back card out there for those who are building their credit.\t\t\t\t\t\t\tWelcome OfferNone at this timeAnnual Fee$39Credit ScoreAverage, Fair, Limited\t\t\t\tStep 2: Choose a Payment ProcessorIf you decide that paying your taxes with a card is a good option for you, it\u2019s a straightforward process.You can visit the IRS website, and they\u2019ll then show you the three card processing options available to you.Each will have the fee listed and the types of payments accepted.You don\u2019t have to send in a voucher if you use your card to pay.Step 3: Go to the Processor\u2019s Site and Make Your PaymentWhen you select a payment processor from the IRS website, it will take you to their third-party site.You can then choose the type of tax payment you\u2019re making \u2014 for example, Form 1040 series payments.You also choose whether you\u2019re paying business or personal taxes.You add how much you want to pay, and you\u2019re then shown the service fee and you have to accept the terms.Frequently Asked QuestionsThe following are answers to questions you may have about paying your taxes with a credit card..accordion-list .accordion-title:hover{color: #4db848;}What are the average interest rates for a credit card?It\u2019s really important to know the interest rate on your credit card before you use it to pay your taxes. Compare it to the interest rates and fees you\u2019ll be charged by the IRS otherwise. If your card has a high interest rate, it\u2019s unlikely the math is going to work out to use it to pay your taxes unless you can pay off the balance right away, and you\u2019re just interested in earning rewards.The average interest rate right now is around 17.30%.If you do get a card with a low introductory APR, you want to ensure that you pay off what you charged to the IRS within that window and also be clear on what the APR is after the introductory period ends.Can you make a partial payment?The IRS will let you set up a payment plan for a setup fee, but if you do so, you\u2019re still going to have to pay the payment processing fees to use your card as well.Can you use more than one card to pay your taxes?If you owe a high tax bill, you may not have the available credit on one card to pay it. You may also want to spread things out to take advantage of different card rewards programs, and you can use two different cards to make a payment. You can also pay part of your taxes with a card and then use another payment method altogether for the rest.Will taking the Earned Income Tax Credit delay my refund?Yes, in an effort to combat fraud, the IRS is holding returns claiming the Earned Income Tax Refund until at least February 15. The IRS projects that it will begin issuing refunds by February 22.Can you pay a past due bill with a card?If you have past-due taxes, you can still use your card and the IRS\u2019s third-party processors to pay it as you would otherwise.What about making estimated tax payments with a card?When you\u2019re self-employed or work as a contractor or freelancer, you\u2019re supposed to make estimated tax payments quarterly. You manually pay your estimated taxes throughout the year, and it\u2019s a similar concept to employees having their taxes automatically withheld from their check.If you overestimate how much you owe, you receive a refund. If you owe at tax time, you underestimated.You can pay estimated taxes with a credit card.Is it possible to pay a tax lien with a credit card?When you don\u2019t pay your taxes, the IRS has far-reaching options available to them. One of those options is to put a lien on your assets. If you have a lien on your home, for example, you might not be able to sell it until it\u2019s paid. Ultimately the assets with a lien can be seized.If you have a federal tax lien on your assets, you can pay it with a credit or debit card. The lien itself isn\u2019t removed until you file a certificate of release form, however.Are there types of taxes you can't pay with a credit card?There are certain types of taxes that you can\u2019t pay with a credit or debit card. Only certain returns are eligible for card payments, and you are also limited to how many times you can use a card to pay your taxes each year.The individual Form 1040 can be paid with a card twice a year, and the Form 1040 Individual Tax Return Installment Agreement can be paid up to twice a month with a card.You can\u2019t use a credit card to pay Form 941 taxes, nor can you use it to pay federal tax deposits.How does using a credit card to pay your taxes affect your credit?If you use a credit card to make a big purchase, such as paying your taxes, it\u2019s going to affect your credit. Opening a new card affects your credit, first and foremost. Beyond that, you will be using more available credit, meaning that your credit utilization ratio will be affected. That could lower your score and a lower credit score may mean higher interest rates.If you\u2019re planning a big purchase soon that would require a credit check, carefully consider how paying your taxes with a card could affect that.On the other hand, if you used an installment plan instead, it wouldn\u2019t affect your credit.Can state taxes be paid by credit card?Along with federal taxes, you may also have to pay state income taxes. These are paid separately, and most states except Alaska and Nevada do accept card payments, but again there\u2019s going to be a fee to do so.The TakeawayYou can pay your taxes with a credit card, but whether or not it makes good financial sense for you depends on your individual situation and the type of card you would use.As you decide, ensure that you know the ins and outs of your credit card\u2019s terms.You should also do the math and include payment processing fees, interest rates, credit card fees, and anything else that would be added to the total cost if you paid your taxes with a card.If you find a strong rewards card, ideally with a 0% APR period, you may be able to come out on top paying your taxes with it.Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and\/or questions are answered..link-more:hover{color: #4db848;border-color: #4db848;}Learn More\t\t\t\t\t\t\t\t\t\tHere are the tax deadlines for the year.Read\t\t\t\t\t\t\t\t\t\t\t\t\t\tHere are our picks for 0% APR cards this year.Read\t\t\t\t\t\t\t\t\t\t\t\t\t\tHere's our take on the best tax software.Read\t\t\t\t"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Passive Income","item":"https:\/\/moneydoneright.com\/passive-income\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Cash Back And Rewards","item":"https:\/\/moneydoneright.com\/passive-income\/\/cash-back-and-rewards\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"Credit Cards","item":"https:\/\/moneydoneright.com\/passive-income\/\/cash-back-and-rewards\/\/credit-cards\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"How to Pay Taxes with Your Credit Card and Come Out Ahead","item":"https:\/\/moneydoneright.com\/passive-income\/cash-back-and-rewards\/credit-cards\/pay-taxes-with-credit-card\/#breadcrumbitem"}]}]