Pay Taxes With Card, 2% Fee
IRS allows credit card payments, but you'll pay up to $175 on a $10,000 tax bill
Paying federal income taxes with a credit card is possible, but it comes with a fee of slightly under 2% of the total transaction. For instance, a 1.75% fee on a $10,000 payment would amount to $175.
The IRS has designated third-party processors, including Pay1040 and ACI Payments, Inc., to handle credit card payments. These processors charge fees for using a credit card as a payment method, with Pay1040 charging 1.75% (minimum $2.50) and ACI Payments, Inc. charging 1.85% (minimum $2.50).
Major credit card networks, such as American Express, Mastercard, Visa, and Discover, are accepted by these third-party payment processors. Additionally, certain digital wallets like PayPal are also accepted.
To make a credit card payment, taxpayers can visit the IRS website, which redirects to the chosen third-party payment processor's website. However, the IRS restricts credit card payments for certain tax types, such as two credit card payments per year for Form 1040.
## Why it matters The ability to pay taxes with a credit card can be beneficial for individuals trying to earn a new cardmember welcome bonus, earn more rewards than the cost of the fee, or take advantage of a 0% introductory APR offer on purchases. However, it's essential to consider the fees associated with this payment method and the limits on frequency.
The fees charged by Pay1040 and ACI Payments, Inc. can add up, and taxpayers should weigh the benefits against the costs. Nevertheless, for those who can afford it, paying taxes with a credit card can provide a convenient and potentially rewarding option.
