Tax refunds are one of the most sought after benefits of credit cards. In 2018, will you be able to pay your taxes with a card?

The “what is the fee for paying taxes with credit card” is a question that has been asked many times. The answer to this question is that there are no fees associated with using a credit card to pay taxes.

If you have a credit card, you may have questioned if you can use it to pay taxes. Taxes can be paid using a credit card, but it won’t be free. On the other side, there is a chance that you will get advantages like accumulating points or reaching your credit card spend criteria to qualify for the welcome bonus.

Continue reading to find out more about paying the IRS using your credit card, including all of the possible advantages and possible costs.

Related: Contribution and withdrawal tax regulations for 401(k) plans

Photograph courtesy of franckreporter.

Can You Use a Credit Card to Pay Taxes?

Depositphotos_79575134_xl-2015

You have a variety of payment methods available to you if you owe the IRS money for unpaid taxes, and using a credit card is one of them. Through a third-party payment processor, the IRS allows credit card payment for tax payments. However, there will be costs associated with using a credit card when making a payment to the IRS via the businesses that are permitted to take credit card payments.

In order to determine if paying these fees is worthwhile for you, it is crucial to carefully weigh the advantages of paying taxes using a credit card. Additionally, before using a credit card, make sure you fully comprehend any related terminology.

DepositPhotos.com, source of the image.

What Advantages Are There to Filing Taxes on a Credit Card?

Credit_card_calculator

Paying taxes using a credit card as opposed to a cheque, direct transfer, or money order has a few key advantages. This includes using your credit card to earn points, getting a welcome bonus, or spending enough on your credit card to qualify for a bonus. Some taxpayers could also choose to use a credit card to fund their payment, either by delaying payment or taking advantage of the credit card’s interest-free grace period.

Kitzcorner / istockphoto, source of the image.

1. Rewards: Cash Back, Points, and Travel Rewards

cash-back-college-shopping

Possibility of receiving travel points or cash back from the credit card is among the major advantages of paying taxes with a credit card. Some of the best rewards credit cards might provide benefits that can cover the charge even with the credit card processing fee. You would want to choose a card or cards that give more than 2 percent cash back, or the equivalent in incentives, for instance, if the credit card charge is 2 percent.

B4LLS/iStock, thanks for the photo.

2. Acceptance Bonus

credit_card_debt

You can be eligible for a significant new account welcome bonus on one or more credit card offers if you have a sizable tax bill. Even secured credit cards may provide these welcome incentives, which may be worth up to $1,000. It may be a simple decision to pay your taxes using your credit card if these incentives are more valuable to you than the 2 percent credit card charge.

Large minimum spending criteria must be met in order to qualify for some of the top welcome bonus deals. Paying your taxes might be a means to cover all or a major part of that required expenditure if you are otherwise unable to do so. Depending on how much your tax bill is, you could even be able to receive more than one welcome bonus by dividing the tax payment between two reward credit cards.

To prevent getting into debt if you go forward with this, make sure you fully understand how credit card payments operate.

Farknot Architect/istockphoto is the source of the image.

3. Reach Your Card Spending Limit

Depositphotos_161466110_s-2019

Some credit cards have spending requirements above and above those needed to qualify for a welcome bonus. This may be just another justification for paying your taxes using a credit card. For an airline or hotel loyalty program, for instance, meeting these spending requirements might advance you to the next tier of elite membership. You could also get a free night’s stay voucher or a companion airfare ticket if you spend a specific amount.

When paying your taxes with a credit card, you must decide if the status or other advantage is worth the processing price. For example, adding debt on your card that you don’t have the money to pay off won’t raise your credit score.

DepositPhotos.com, source of the image.

The IRS Uses What Payment Processors?

Depositphotos_56767889_s-2019

The three payment processors that the IRS accepts levy various fees for credit card payments, which are as follows:

  • 1.98 percent (minimum charge of $2.50) for ACI Payments, Inc.
  • Pay1040: 1.87 percent; $2.50 minimum charge
  • PayUSAtax: 1.96 percent; $2.69 minimum.

There can be a limit on how many times you can use a credit card to pay taxes each year, depending on the kind of tax payment. Additionally, tax payments above $100,000 could be subject to additional conditions and can only be completed over the phone. It’s crucial to weigh the benefits and drawbacks before choosing whether to pay your taxes using a credit card. You could benefit, but you might also incur significant expenses.

DepositPhotos.com, source of the image.

Benefits of Using a Credit Card to Pay Taxes

Depositphotos_217700870_m-2015

  • Earn benefits, points, miles, or cashback for your purchases.
  • Get more time to pay your taxes, particularly if you’re using a card with a 0% APR offer.
  • surpass a spending limit

DepositPhotos.com, source of the image.

Cons of Using a Credit Card to Pay Taxes

Depositphotos_23052264_s-2019

  • fees for credit card payments
  • Your finances may suffer from high credit card interest rates.
  • Debt might lower your credit score.

DepositPhotos.com, source of the image.

When to Think About Paying Your Taxes with a Credit Card

man_holds_credit_card_with_laptop_and_phone

Consider using a credit card to pay your taxes for a number of reasons. Earning incentives from your credit card, such as travel rewards, points, or cash back, is one of the most common reasons, as was previously said. This might also include getting a credit card welcome bonus or spending a certain amount with a card to unlock additional membership levels or exclusive benefits.

You may set up a payment plan or apply an extension with the IRS if you need more time to pay your taxes. On the other hand, you should budget for penalties for the extension and interest on the payment schedule. To allow yourself more time to pay your taxes, you can choose to pay them using a credit card that has a 0% APR. The cost of processing credit cards will still apply, although it could work out to be less expensive.

Jirapong Manustrong/Istockphoto provided the photo.

During promotional periods, consolidating credit card debt

Depositphotos_197408478_s-2019

If you have additional debts that you may consolidate onto the card to pay off, this could also be practical for you. To avoid paying the high interest rates, be sure to settle the debt in full before the promotional period expires.

Finally, before using a credit card to make a large and significant payment like taxes, it’s crucial to have a thorough understanding of how cards function and how credit card payments work. A smart habit to develop is checking your credit card account on a frequent basis, particularly after paying taxes to make sure the transaction was successful.

DepositPhotos.com, source of the image.

The Lesson

iStock-1064958178

It is entirely feasible to pay taxes using a credit card, but before using your plastic to send money to the IRS, you should weigh the benefits and drawbacks of doing so. One is that you will pay fees, which vary depending on the payment processor, and there is always a chance that taking on debt would harm your credit score. However, the likelihood of benefits and the extension of the tax payment deadline may exceed any drawbacks.

Study More:

This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.

 

The advice offered on this website is generic in nature and does not take into consideration your unique goals, requirements, and financial position. You should constantly think about whether or not they fit your own situation.

SoFi’s Lantern

SoFi Lending Corp., a lender authorized by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636, is the owner of this Lantern website. (www.nmlsconsumeraccess.org)

All pricing, fees, and conditions are provided without assurance and are subject to change at the sole discretion of each supplier. There is no assurance that you will be accepted or eligible for the stated rates, fees, or terms. Your ability to get the terms you want relies on a number of criteria, including the advantages you ask for, your credit score, use history, and other things.

*Check your rate: Lantern and/or its network lenders use a soft credit draw, which has no impact on your credit score, to determine the rates and conditions you qualify for. However, if you choose a product and proceed with your application, the lender or lenders you select may request your complete credit report from one or more consumer reporting agencies. This is known as a hard credit pull and may have an impact on your credit.

All loan conditions, such as interest rates, Annual Percentage Rates (APR), and monthly payments, are estimations based on the little information you supplied and are solely offered for informational reasons. According to the Truth in Lending Act, the estimated APR includes all applicable costs. Depending on the lender you choose, their underwriting standards, and your own financial circumstances, the exact loan conditions you get, including APR, may vary. The lenders, not Lantern or SoFi Lending Corp., have given the loan conditions and rates that are shown. For further information, please examine the Terms & Conditions of each lender.

Your credit ratings and potential interest rates are influenced by a variety of variables. According to federal or state legislation, including the Credit Repair Organizations Act, SoFi is not a credit repair organization. SoFi does not provide “credit repair” services, recommendations, or help with “rebuilding” or “enhancing” your credit history, score, or report. Visit the FTC’s credit page at https://www.consumer.ftc.gov/topics/credit-and-loans for more information.

Financial Tips & Strategies: The advice offered on this website is generic in nature and does not take into consideration your unique goals, requirements, and financial position. You should constantly think about whether or not they fit your own situation.

 

Individual Loan:

In collaboration with Even Financial Corp. (“Even”), SoFi Lending Corp. (“SoFi”) manages this Personal Loan product. In the event that you submit a loan enquiry, SoFi will send your data to Even, who will then send it to its network of lenders and partners for examination in order to ascertain if you qualify for pre-qualified or pre-approved offers. Your credit information will also be obtained from a credit reporting agency by the lenders or partners obtaining your information. Pre-qualified and pre-approved offers from one or more lenders/partners will be given to you here on the Lantern website if you fulfill one or more lender’s and/or partner’s eligibility requirements. On the loan enquiry form, which you can access by going to our pages for personal loans and student debt refinancing, further details about Even, the procedure, and its lenders and partners are provided. Click to read more about the privacy policy, terms of service, and licenses and disclosures for Even.

The maximum APR for personal loan offers made to consumers on Lantern is 35.99 percent. A $10,000 personal loan with a 36-month term and a 10-percent interest rate, for instance, would cost $11,616.12 in total payments over the course of that time.

Refinancing Student Loans

This student loan refinancing scheme is run by SoFi Lending Corp. (“SoFi”) and Even Financial Corp. (“Even”). In the event that you submit a loan enquiry, SoFi will send your data to Even, who will then send it to its network of lenders and partners for examination in order to ascertain if you qualify for pre-qualified or pre-approved offers. Your information will be sent to the lender, who will also get your credit report information from a credit reporting agency. Pre-qualified and pre-approved offers from one or more lenders/partners will be given to you here on the Lantern website if you fulfill one or more lender’s and/or partner’s eligibility requirements. On the loan enquiry form, which you can access by going to our pages for personal loans and student debt refinancing, further details about Even, the procedure, and its lenders and partners are provided. Click to read more about the privacy policy, terms of service, and licenses and disclosures for Even.

The student loan refinancing loans provided by Lantern are private loans, not part of the government loan program, hence they lack the debt forgiveness and repayment choices, such as Income Based Repayment, Income Contingent Repayment, and Pay as You Earn (PAYE).

Notification: As a result of recent legislation developments, interest on federally held loans is no longer charged and all federal student loan payments are halted until May 1st, 22. Before refinancing federally held loans, please carefully evaluate these changes since you will no longer be eligible for them or any upcoming incentives pertaining to federally held loans.

Refinancing an Auto Loan

Information on auto refinancing loans is provided on this Lantern page by Caribou. The auto loan refinance information provided on this Lantern site is illustrative and subject to your meeting the lender’s requirements, which include: your meeting the lender’s credit standards; the loan amount must be at least $10,000; and the vehicle must be no older than 10 years old and have no more than 125,000 miles on the odometer. When you contact the lender, the loan rates and conditions you are offered may differ from those on this Lantern website and might also be influenced by your creditworthiness. There can be more terms and restrictions, and all of them might differ depending on where you live.

Disclosure for Secured Lending:

Applying terms, conditions, state limitations, and minimum loan sums. We advise you to carefully examine if a secured loan is the best option for you before submitting an application. You risk losing the assets you pledged as security if you are unable to repay a secured personal loan. Not all loan applicants will be eligible for the highest loan amounts or the best lending conditions. The capacity to satisfy underwriting standards, which vary by lender and include but are not limited to a reliable credit history, enough income after monthly costs, and the availability of collateral, is a prerequisite for loan approval and determines the actual loan conditions.

Death Benefits:

SoFi Life Insurance Agency, LLC offers information about insurance on Lantern. To see our licenses, click here.

Sam Thomas of Istockphoto provided the photo.

Read more from MediaFeed

iStock-1166375203

Deagreez/iStockPhoto, source of the image.

AlertMe

The “pay irs by phone” is a question that has been asked quite often. It’s important to know if you can use your credit card for taxes.

  • can you pay taxes with a credit card on turbotax
  • best credit card to pay taxes
  • irs payment plan
  • irs gov direct pay
  • pay taxes online
You May Also Like

How to make extra cash in 2022

The global financial market is in a state of flux. In the…

22 ways to declutter your household & make some cash

Here are 22 ways to declutter your household and make some cash.…