Should You Pay Your Taxes With a Credit Card?

The question of whether or not to pay your taxes with a credit card has been around for a few years now. According to conventional wisdom, the answer is “no” — the fees associated with doing this are simply too high. But what if your reward credit card is generous enough to more than offset those fees?

Edit: While there used to be a great 5% cash back promo floating around, it has since expired… When this deal was still available, you could couple it with payment through OfficialPayments.com, which charges a 2.49% processing fee, and you can earn a quick 2.51% by paying your tax bill with a credit card.

I would’ve been all over this deal myself this year if we hadn’t intentionally under-withheld to the point that our tax bill will be far larger than what we could reasonably put on a credit card.

Update to add: And no, your credit card rewards aren’t taxable.

9 Responses to “Should You Pay Your Taxes With a Credit Card?”

  1. Anonymous

    D’oh, nevermind, I just saw that the flat fee is for ATM/Debit cards only, and neither of mine have a rewards program associated.

    It pays to read the fine print first, oops!

  2. Auditor: The additional fee is levied by the payment processor, and it’s 2.49%. That’s it. There are no further fees. Obviously, for a “normal” reward card that gives 1% on things like this, you’re still being the eight ball. But if you have a card paying in the 3-5% range, then you can effectively shave a bit off your tax bill.

  3. Anonymous

    I know there is an additional fee you pay the IRS if you use a credit card to pay. I don’t remember how much, or maybe it’s a percentage. This could put a little rain on the Citi parade.

  4. Anonymous

    I managed to get a tax refund this year (~$200 federal, ~$250 state). However, if I did owe taxes, I don’t think I would put it on my credit card…it’s a very rare card that the cash back would make it worth it. Also, I would worry about paying it off….

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