It is hard to beat the convenience of a credit card for purchases, but does that same convenience make it worth paying your taxes by credit card? It might, but that depends on several factors involving money and time. “Your credit card is usually a high-interest option, but it is an option,” explains Betterment Head of Tax Eric Bronnenkant.
Before deciding whether to put your tax bill on plastic, consider the following:
- Fees – By law, the IRS cannot pay credit card transaction fees. As a result, credit card payments to the IRS are handled through secure third parties approved by the agency. See the IRS website for a list of the approved payment processors and their fees.
Credit card fees are percentage-based with a minimum “convenience fee” for smaller bills ranging from $2.50 to $2.69. Percentages range from 1.87% to 1.99…