Can you pay taxes with a credit card?

If you end up owing federal taxes, you can make tax payments to the IRS with a credit card online or over the phone. But before you do, consider how it could affect your finances and your credit. And whether it’s worth the extra fees.

Keep reading for more information about how to pay your taxes with a credit card and the potential advantages and disadvantages.

Key takeaways

• You can pay your federal taxes with a credit card online or by phone.
• The IRS says paying your taxes with a credit card is quick and secure. 
• If you pay your taxes with a credit card, you will pay payment processor fees to complete the transaction.
• Paying your taxes with a credit card could result in accessing credit card rewards or bonuses, but you might incur interest or your credit scores might be affected if you aren’t able to pay off your credit card balance.
• Other ways to pay your taxes include wiring payments from your bank or paying by cash, check or electronic funds withdrawal.

If you pay your federal taxes with a credit card, it’ll be through one of the third-party payment processors the IRS uses. The payment processors charge fees, so the IRS recommends choosing the one that offers the best fees for your card and payment amount.

Paying your federal taxes with a credit card takes just a few steps:

1. File your taxes and find out the amount you owe.
2. Review the third-party tax payment processors on the IRS’ website and contact the one you’d like to use. 
3. Complete the steps by phone or online to make or schedule your payment.

Whether or not you want to pay taxes with a credit card could depend on what works best for you. But before you pay your taxes with a credit card, you may want to consider a few potential advantages and disadvantages. And if you can’t pay your taxes right away and are looking for another option, you could apply online for a payment plan with the IRS.

Here are some of the pros of paying your taxes with a credit card:

• Possible rewards: If you use an eligible rewards credit card to pay your taxes, you could earn rewards like cash back or travel miles. But it’s a good idea to make sure those outweigh the payment processing fees for paying taxes with a credit card.
• Potential bonuses: If you’re using a newer credit card, you may be able to take advantage of a sign-up bonus or 0% APR if your card has a promotional rate.
• The security: The IRS says that paying taxes with a credit card through one of its third-party payment processors is safe and secure.

Some of the cons of paying your taxes with a credit card could include:

• Payment fees: The IRS uses third-party payment processors for credit card payments, and each of them charges a flat fee or a percentage of your payment.
• Potential interest: If you make your payment with a credit card and can’t pay off your credit card balance right away, you could incur interest charges. But keep in mind that the IRS offers the opportunity to apply for a payment plan if you can’t pay your taxes right away and are looking for another option.
• Possible effect on your credit scores: If you can’t pay off your credit card balance after paying your taxes with a credit card, you could increase your credit utilization ratio—or the amount of available revolving credit you’re using. And your credit utilization ratio can affect your credit scores.

There are other ways to pay your taxes, many of which don’t have fees, including:

• Electronic funds withdrawal: This option is available when you e-file your taxes with a tax preparation software or a tax professional. It involves making a direct deposit payment request from your bank account. The IRS doesn’t charge a fee for it, but it says you may want to check with your bank to see if it does.
• Your bank account: The IRS allows you to make online tax payments directly from your bank. The service is free.
• Your debit card or digital wallet: Paying with your debit card or digital wallet is the same process as with your credit card. You can pay online or by phone through one of the IRS’ payment processors.
• Same-day wire: You could wire the payment from your bank, but the IRS advises checking with your bank about things like the cost and any cut-off times.
• Check, money order or cashier’s check: These options require mailing your payment, which could take longer than other options. And the IRS recommends considering alternative payment methods first.
• Cash: You can pay by cash in person at one of the IRS’ retail partners or one of its taxpayer assistance centers. If you want to pay at a Taxpayer Assistance Center, the IRS advises calling 30-60 days before you want to pay to make an appointment.

It’s quick and secure to pay your taxes with a credit card. But paying your taxes with a credit card usually involves fees. And depending on how you manage your credit card statements, it might result in paying interest and affect your credit scores.

If you want to keep an eye on your credit, consider using CreditWise from Capital One. CreditWise is free, and it won’t hurt your credit scores. It’s available to everyone, whether or not you’re a Capital One cardholder. And you can use the CreditWise Simulator to see how different things, like paying off your credit card balance, could affect your credit scores.