How to pay taxes with a credit card
Key takeaways
- You can pay your taxes online or by phone using your credit card.
- Using a credit card to pay your taxes typically comes with some additional processing fees you wouldn’t otherwise pay.
- If you dislike the idea of additional fees, you can pay your taxes with several other methods, including debit card, electronic funds withdrawal, Direct Pay and cash.
It’s tax season again, and many of us are looking for the easiest way to handle filing and payment. The IRS offers many online tools and online filing to help taxpayers file easily and quickly. It’s also strongly encouraged to pay taxes online, and the IRS has entered into partnerships to make online payments easy, accessible and secure. The deadline for filing your taxes this year is April 15.
If you are paying taxes online, using a credit or a debit card is a good option with a few potential advantages. Here’s how to pay taxes with a credit card and why you might consider doing so.
Should I pay my taxes with a credit card?
In most cases, there are cheaper ways to pay your taxes than a credit card. This is because paying with a credit card involves processing fees on the front end and potential added interest on the back end.
However, paying for taxes with your credit card is a solid choice if you have another goal you’re also trying to accomplish. For example, if you’re trying to reach a card’s sign-up bonus spending requirement, or you want to pay your taxes off over time using a 0 percent intro APR card.
Don’t expect much in the way of rewards if you’re using a rewards card to pay: processing fees for each processor are nearly 2 percent. This will eat into, if not fully negate, any rewards you might earn on the payment.
If you’re paying taxes for your business with a credit card, those fees may be tax deductible.
How to pay taxes with a credit card
If you want to pay your taxes with a credit card, you’ll want to start by calculating how much you’ll owe. This will give you an idea of how much credit you’ll need to cover the payment before you file. You are generally allowed to make two federal tax payments on a credit card per year (freelancers are allowed to make two estimated tax payments per quarter on a credit card).
While there are pros and cons to paying your taxes with a credit card, it is one of the quickest ways to pay your taxes. You can pay by phone or online, and the steps for paying taxes with a credit card are fairly straightforward.
Online
The first step for making your payment is to go to the IRS website and click the “Pay” link at the top of the homepage. Click on the “Pay by card or digital wallet” option. From this page, you’ll choose a card processor to handle your payment.
| Processor |
|
|
|---|---|---|
| Pay1040 |
|
|
| ACI Payments |
|
|
Once you’ve chosen a card processor, click the “Make a Payment Button.” Doing this will take you to the processor’s website to complete your transaction. From there, you can follow the instructions for making a payment.
If you are paying federal and state taxes, make sure your card processor can cover both. To complete your transaction, you may also need to have your tax information on hand.
By phone
Each of the three card processors has a dedicated line for making payments. They are as follows:
- Pay1040: 888-729-1040
- ACI Payments: 800-272-9829
When you call, make sure you have your credit card and tax return information on hand.
Alternatives to paying taxes with a credit card
The IRS provides a variety of options to take care of your tax payments. Here are some other payment options to consider.
Use your debit card
Using your debit card is another option for paying your taxes. The steps are the same as those for using a credit card. However, the processing fee for a consumer debit card payment is a flat rate that can range anywhere from $2.20 to $2.50.
A debit card payment is linked directly to your cash funds. You will need to make sure that you have the cash available for the payment if you are going with this option.
Pay by Direct Pay
Direct Pay allows you to send money directly from a savings or checking account. You don’t have to register to use Direct Pay and can access it through the IRS website or IRS2Go app. To complete your payment, you will need information from an old tax return from within the past six years to verify your identity. You can’t make more than two payments using Direct Pay in a 24-hour period.
Use electronic funds withdrawal (EFW)
Using EFW is like creating a digital check to make a payment. It doesn’t require any enrollment and the IRS doesn’t charge you a fee to pay in this way. Before choosing this form of payment, you’ll want to check with your banking institution to see if it charges a fee for payment. In order to complete an EFW, you’ll need your bank account number, routing number and type of account. This option is only available if you file using tax preparation software or the services of a tax professional.
Use the Electronic Federal Tax Payment System (EFTPS)
EFTPS is a free service offered by the IRS for dealing with personal and business tax payments. It’s available year-round, but you must enroll to use the service. To enroll, you’ll need to register a bank account and the address associated with your tax return. Once you enroll, you’ll get an ID number and password and can make payments at any time.
Pay with cash
The IRS has partnered with participating retail stores, including 7-Eleven, CVS Pharmacy, Family Dollar and more, to give taxpayers the option of paying with cash. There is a fee of $1.50 per payment when the processor is ACI Payments and $2.50 with 1040.com. There is a limit of $500 per payment but no limit on how many payments you can make per day. The IRS offers step-by-step instructions on how to pay by cash on their website. Another way to pay cash is to buy a prepaid card and pay online or using the IRS2Go app.
Send a check in the mail
While the IRS strongly encourages people to pay their taxes online, you can still use the traditional option of sending your tax payment by mail. You can send a check, money order or cashier’s check made payable to the U.S. Treasury for your intended payment.
Make sure that your check has your personal information, including your name, address, phone number and Social Security number. You’ll also need to include the tax year and tax form number on your check to make sure it is applied appropriately.
If you are choosing the pay-by-mail option, it is best to send your check early and pay for tracking. If your check gets lost in the mail, you will still be responsible for payment and any late fees that may apply.
Bottom line
Paying your taxes with a credit card is one of the quickest ways to get the job done. If possible, use a card that earns rewards to help offset the additional processing fee of the card payment. And if you’d rather avoid the fee altogether, you can still make your payment the old-fashioned way through mail or with cash.
