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Should I Pay My Taxes With Plastic?
Tax week is here again! And in a last-ditch effort to boost future e-payment numbers, the IRS recently announced that some taxpayers will now be allowed to deduct the convenience fees card companies charge to process electronic tax payments.
The IRS has made it easier than ever to pay your tax bill with plastic, and now you might even be able to deduct the fee, so why not go ahead and settle your debt with Uncle Sam by whipping out your favorite credit card?
While the ease of paying online is tempting, paying your taxes with plastic is generally a poor decision. Convenience fees average 2.5% ($125 on a $5,000 tax bill), not everyone will qualify for the miscellaneous itemized deduction (Subject to the 2% limit on Form 1040), and you should never pay taxes on a credit card if you plan on carrying a balance to pay the debt over time. Bottom line? There's probably a cheaper way to dig up the money for your tax bill when cashflow is tight. Try a generous family member first, or visit IRS.gov for more information about payment options.
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