Depending on your financial situation, a credit card might be a good place to turn when it comes time to pay your tax bill. The decision comes down to several factors, like how much you owe Uncle Sam and what kind of benefits you earn from your credit card company. Here are some of the questions you should consider when deciding.
Which Credit Card Does The U.S. Government Take?It might surprise you to learn that not all credit cards are acceptable when it comes to paying taxes. Only American Express, Discover and MasterCard can be used, but not Visa. It could change over the next few years, but that's how it stands now.
Is It Easier To Pay With A Credit Card Rather Than A Check?Writing checks seems to be a hassle to a new generation now accustomed to paying bills online. Whether you are filing electronically or mailing in your return, to pay by credit card, it requires a phone call. Call 888-2PAY-TAX (888-272-9829). Yes, the 888 area code means this is a toll-free call.
On the phone, you'll have to supply some information about yourself. Most importantly, you can pick the date (up until tax day, typically April 15 unless it falls on a weekend) you want the transaction to occur.
Does It Cost Anything To Pay Taxes With A Credit Card?
Yes, it does. And this is important to consider. Normally, businesses are charged a fee when a customer pays by credit card. Uncle Sam won't pay this surcharge. However, a "convenience fee" of roughly 2.5 percent is added.
If you are receiving any perks from your credit card company, like frequent flier miles, you may need to determine whether this extra fee offsets them. Remember, you'll pay more if you don't defray your credit card in full when the bill comes from whatever interest rate you pay. Can I Pay Someone Else's Taxes With My Credit Card? Yes. And it's not a bad way to add on more miles to your card.
Are There Any Odd Restrictions To Know About?Of course there are, these are tax rules, there are always special restrictions. You cannot use a credit card to pay if you didn't file a return last year. If you filed a joint return, you need to have been the primary filer.
Can I Pay My State Taxes Too?Not all states are currently accepting credit cards for tax bills. However, bellwether states like California, New York, Illinois and New Jersey already allow it. Check with your state government to be sure.
Any Last Advice?Be advised, you cannot cancel this transaction once you authorize it.
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