This story is part of Taxes 2022, CNET's coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time. Show
If you owe the IRS an estimated tax payment because you're a freelancer or self-employed, you could use the right credit card to make your tax payment. Though paying your taxes with a credit card may not be the best choice for all scenarios, especially if you're in the red or don't expect to be able to pay off your balance soon, there are circumstances that can make it lucrative. If you're facing a lot of debt already or your credit is not in good standing, working out a payment plan with the IRS might be a better, lower-interest option. Even the best credit cards for bad credit don't have the perks to make this maneuver worthwhile. But if you have good credit, you can use a card that earns you some combination of rewards, a welcome bonus and interest-free financing to make the transaction advantageous. Keep in mind that the IRS and state websites typically charge nearly 2% to process credit card transactions, while online tax software services may charge as high as 2.49%. So you'll want the right mix of credit card benefits -- plus no annual fee -- to neutralize processing fees and reap the benefits. Here's what you need to know if you're considering using a credit card this tax season. How do you pay taxes with a credit card?You can make your payment directly on the IRS website, with your choice of three different third-party payment processors for a credit or debit card. Each processor charges about 2%, but it's more expensive (between 2.35% and 2.49%) if you use a credit card to file your taxes using an online software package like that of TurboTax or H&R Block. The fees are broken down in this chart on the IRS website. You can pay directly by selecting a "make a payment" under the payment processor of your choosing from this page.  Here's another chart the IRS put together and posted to its site to compare the processor fees: You can also pay by calling the payment processors directly using the numbers listed on the IRS site. The same fees will apply. The IRS says your transaction is safe and secure, and your information will be used solely to make your payment. And it notes that the agency doesn't see any part of the card service fee, which you can deduct for business taxes. If you're worried about security, though, using a virtual credit card can offer additional privacy. There are some limits on the number of credit card payments you can make with the IRS per year -- you're limited to two in most cases, and you can use two different credit cards for each payment if you want. If you own a business or are self-employed, you can also use your credit card to make estimated tax payments throughout the year. The benefits of paying taxes with a credit cardIf you're going to pay your taxes with a credit card, you can rack up some bonus rewards points or get cash back. Maybe you've recently opened up a card with a signup bonus or welcome offer that requires you to put a certain amount on your card within a specific time frame. Or maybe you have a card that offers benefits once you reach a particular spending threshold, like the X1 Card. Charging your taxes could help you get there. In general, you'll want to make sure your credit card's rewards return rate percentage exceeds the payment processor fee percentage. For example, if you're paying with a credit card using Pay1040, the fee is 1.87%. It's only worth charging your taxes if you're using a card with a reward rate that's at least 2%. For some, the primary benefit of using a credit card to pay your taxes will be the extra few weeks you'll have to scrape together a payment. But be careful. Note your statement close date and how long you'll have to pay the balance off in full -- because there are some major risks in using a credit card to pay your taxes. Caution: Avoid using a credit card to finance your tax billIn almost all cases, we don't recommend paying your taxes with a credit card if you'll be unable to pay off the balance right away. "For those who can't pay their taxes, the IRS charges a lower interest rate than conventional credit cards," says Los Angeles CPA Rob Seltzer, referring to the agency's payment plans. If you need more time to file, you can also look into filing an extension with the IRS -- but even with an extension, you may incur penalty fees if you don't pay on time (this year's due date is April 18). Another alternative is to utilize a 0% intro APR offer to give yourself some more breathing room. Typical 0% introductory APR cards offer 12 to 20 months' worth of reprieve where you only have to pay the minimum to avoid accumulating interest. If you can pay off the entirety of your tax bill during your introductory APR period, while making all the minimum payments each month, then this type of credit card financing may be worth it. However, since you'll still incur IRS processing fees, be sure to compare these fees with the cost of an IRS payment plan before committing. Best credit cards for paying your taxesIf you do decide to pay your taxes with a credit card, below are our picks and partner offers for the cards with the best combinations of rewards rates, welcome bonuses and introductory 0% APR offers to mitigate the burden of putting your taxes on a credit card.
Intro OfferEarn a $200 cash rewards bonus after spending $1,000 in purchases in the first 3 months APR17.99%, 22.99%, or 27.99% Variable APR Intro Purchase APR0% intro APR for 15 months from account opening Recommended Credit Excellent, Good Reward Rates
Annual Fee$0 Intro Balance Transfer APR0% intro APR for 15 months from account opening on qualifying balance transfers Balance Transfer APR17.99%, 22.99%, or 27.99% Variable APR Balance Transfer Fee up to 5%; min: $5 Foreign Transaction Fees 3% Penalty APR None
Our Take
Intro OfferIntro Offer: Unlimited Cashback Match - only from Discover. Discover will automatically match all the cash back you've earned at the end of your first year. There's no minimum spending or maximum rewards. You could turn $150 cash back into $300. APR14.99% - 25.99% Variable Intro Purchase APR0% for 15 months Recommended Credit Good/Excellent Reward Rates
Annual Fee$0 Intro Balance Transfer APR0% for 15 months Balance Transfer APR14.99% - 25.99% Variable Balance Transfer Fee 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)* Late Payment Fee None the first time you pay late. After that, up to $41. Foreign Transaction Fees None
Our TakeThe Discover it® Cash Back* offers the Unlimited Cashback Match as a welcome bonus, meaning in addition to the 1% you earn when you make a transaction with this card, Discover will match your total cash back at the end of your first year. This nets you a total of 2% to cover the processor fees -- and then you can also take advantage of the 0% introductory APR on purchases for 15 months (14.99% to 25.99% variable APR thereafter). See our full review of the Discover it Cash Back for more details.
Intro OfferN/A APR14.99% - 24.99% Variable APR on purchases and balance transfers Intro Purchase APR0% Intro APR for 21 billing cycles for purchases Recommended Credit Excellent/Good Reward RatesN/A Annual Fee$0 Intro Balance Transfer APR0% Intro APR for 21 billing cycles for any BTs made in the first 60 days. A 3% fee (min. $10) applies. Balance Transfer APR14.99% - 24.99% Variable APR on purchases and balance transfers Balance Transfer Fee Either $10 or 3% of the amount of each transaction, whichever is greater. Late Payment Fee See Terms Foreign Transaction Fees 3% Penalty APR none Our TakeThis online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now. The BankAmericard® credit card is a great choice if you're looking for a card with a long 0% introductory APR for purchases and balance transfers. Cardholders will get 21 billing cycles to pay off new purchases or a transferred balance before the standard APR of 14.99% to 24.99% variable applies. Balance transfers must be completed within 60 days of opening the account. While the card offers no rewards, which means you'll have no buffer between you and any processing fees, it will give you one of the longest time periods on the market to pay off your taxes.
Intro OfferFor a limited time, earn $200 cash back after spending $1,500 on purchases in the first 6 months of account opening. APR16.99% - 26.99% (Variable) Intro Purchase APRN/A Recommended Credit Excellent, Good Reward Rates
Annual Fee$0 Intro Balance Transfer APR0% intro for 18 months on Balance Transfers Balance Transfer APR16.99% - 26.99% (Variable) Balance Transfer Fee There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening. Late Payment Fee Up to $41 Foreign Transaction Fees 3% Penalty APR Up to 29.99% (Variable)
Our TakeThe Citi® Double Cash Card is another option that gives you the opportunity to earn enough cash-back rewards to meet or exceed the processor fees. You earn 1% when you make the transaction, and another 1% when you make the corresponding payments. See our full review of the Citi Double Cash Card for more details. *All information about the Discover it Cash Back has been collected independently by CNET and has not been reviewed by the issuer. The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners. Can you pay what you owe the IRS with a credit card?Taxpayers can also pay their taxes by debit or credit card online, by phone or with a mobile device. The IRS does not charge a fee, but convenience fees apply and vary depending on the card used. Installment agreement. Taxpayers who are unable to pay their tax debt immediately may be able to make monthly payments.
Is it a good idea to pay taxes with credit card?Bottom line. Paying taxes with your credit card isn't recommended, as it comes with processing fees and the possibility of paying interest if you can't pay off the balance right away. But if that choice is the only one available to you, it could be better than owing the IRS.
Why can't I pay my taxes with a credit card?Yes, you can pay taxes with a credit card, but the real question is, should you? Unlike paying your taxes with a bank account transfer, credit card payments aren't free. You'll wind up incurring a fee that's a percentage of your tax payment. The fee you're charged varies by the payment processor you choose.
What payment methods does IRS accept?Pay directly from a checking or savings account (Direct Pay) (Individuals only) Pay electronically online or by phone using Electronic Federal Tax Payment System (EFTPS) (enrollment required) Pay by check, money order or debit/credit card.
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Can you pay your irs taxes with a credit card
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