Can I pay my taxes with a credit card? Yes. SHOULD you pay taxes by credit card? No! I will be the first to tell you that I am a huge proponent of cash back credit cards or rewards credit cards and in fact I try to use my True Earnings American Express Card for as much as I possibly can BUT you won’t find me paying taxes with my credit card. Here is why.
The IRS allows anyone that wants to to pay federal taxes online with a credit card BUT the very important catch is that the convenience charges range anywhere from 1.95% to 3.93% of your total taxes paid. So, just because you may be earning some nice rewards or points with your credit card then they likely will not even be close to compensating for the 1.95% to 3.93% that gets lopped right off of the top of any IRS credit card tax payments that you make.
However, if the question becomes, “Should I pay my taxes with a debit card?” then things change drastically because rather than having to pay a convenience fee of 1.95% to 3.93% of your total tax payment with a debit card you only have to pay a flat fee of right around $4. This means that for all of you savvy consumers who justifiably chase credit card rewards at every opportunity you should dial it back a notch and NOT pay your taxes with a credit card but rather try a cash back debit card like the PerkStreet rewards debit card if you must use a rewards card to pay your tax bill.
Here are the latest numbers from the IRS on paying taxes online with a credit card or debit card:
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