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Pay Your Income Taxes With a Credit Card — Avoid Penalties and Earn the Rewards

The IRS accepts American Express, MasterCard, Discover and Visa.  Make sure, however, you understand that you will be charged a convenience fee.  The convenience fee will be announced during a phone call to one of the service providers.  You have the option of discontinuing at this time.  At the end of the phone call, you will be given a confirmation number which is entered in the upper left corner of page 1 of Form 1040. 

It may make sense for you to pay your taxes by credit card.  For example, if you can’t pay your taxes by April 15th, you normally would incur a late payment penalty.  Paying by credit card will help you avoid this late payment penalty and also allow you to earn the rewards that are available from the particular credit card you are paying with. 

The best reward cards, in our opinion, are the cash back rewards.  Using this type of credit card to pay your taxes, with the fact that you’re eliminating the late payment penalty, could more than offset the cost of the convenience fee and possible interest charge on the credit card.  But we encourage you to pay this off in a month or so otherwise the credit card interest could end up being higher than the late payment penalty and interest charged by the IRS.

Contact one of the service providers below to arrange payment:

Official Payments Corporation

1-800-2PAYTAX (800-272-9829)

877-754-4413 (customer service)

www.officialpayments.com

Link2Gov Corporation

1-888-PAY-1040 (888-729-1040)

888-658-5465 (customer service)

www.PAY1040.com

By Woody Alpern

CPA and Registered Investment Advisor