Is Paying Your Taxes With a Credit Card a Good Idea?
Is Paying Your Taxes With a Credit Card a Good Idea?
For most taxpayers tax season means a nice refund. However, for some taxpayers, the news is not as good. So what if you’re one of those taxpayers that owes the IRS money after filing your return? How should you pay it off? For example, could you pay off your tax bill with a credit card?
Yes, you could use a credit card. But is that a good idea? It’s probably not, in most cases. In reality, it should be a last resort. If you simply can’t afford to pay your tax bill then using a credit card might be a viable option. However, there are some things you should know.
If you use a credit card, you’ll also have to use a payment processor. And that means you’ll have to pay an extra fee for that. The IRS also limits how many times you can use a credit card to make tax payments in a given year. If you’re paying your prior- or current-year taxes then you can only pay via credit card twice per year. That is unless you use an installment plan.
The other thing to keep in mind is interest. Unless you open a new, interest-free card and pay off tax your bill within the interest-free period, you’ll have to pay interest on your credit card bill. That means your overall bill will be even higher.
In most cases, you’re better off setting up a payment plan with the IRS and avoiding the extra fees and interest that come with using a credit card.
We hope you found this article about “Is Paying Your Taxes With a Credit Card a Good Idea?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
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