Should You Pay Taxes Online with a Credit Card?

You can pay taxes with a credit card. But should you? In some situations, paying your taxes with a credit card could be a good option if you understand the costs involved.

by Janet Berry-Johnson
updated May 24, 2022 ·  3min read

Owing money to the IRS that you can't afford to pay is stressful. Of course, you can pay taxes online with a credit card. But should you? In some situations, paying your taxes with a credit card could be a good option if you understand the costs involved.

This article looks at the pros and cons of paying your income tax debt with a credit card.

A woman holds her credit card while deciding whether to pay her taxes online.

Can You Pay Your Taxes with a Credit Card?

In short, yes. The IRS does accept credit card payments. However, paying your tax debt that way could be expensive.

The IRS uses third-party payment processors to accept payments via debit and credit card, and those processors charge a fee.

The fee you'll pay depends on the processor you choose. It's usually a percentage of the payment amount, subject to a minimum fee. You can find a schedule of the current credit card processing fees at IRS.gov. These fees might be manageable if you owe a few hundred dollars. But if you're paying thousands of dollars, those fees can significantly increase the cost of paying off your tax debt.

You can pay online or by calling the payment processors at the numbers listed in the above link. The same processing fees apply whether you pay online or over the phone.

You also need to factor in the interest rate your credit card issuer charges to figure out how much paying your tax bill with a credit card will cost. While your rate depends on your credit card and the type of card you use, they tend to range anywhere from 12% to 24%.

To make paying taxes with a credit card more affordable, consider whether you can get a card with an introductory 0% APR. Zero percent APR cards typically offer no interest for a set period, usually from six to 21 months. So if you can pay off the balance within that timeframe, paying taxes with a credit card could be a good choice.

Paying with a credit card could also be a way to earn credit card rewards or cashback. Just make sure you have the cash available to pay the balance in full before getting hit with interest charges. Also, make sure the rewards or cashback you'll earn exceed the payment processing fee.

Rules for Paying Taxes with a Credit Card

Before pulling out your credit card, keep the following IRS rules in mind:

  • You can't pay employment taxes—either employee withholdings or the employer portion of FICA taxes—with a credit card. You must use EFTPS to make federal employment tax deposits.
  • The IRS limits the number of times you can pay your taxes with a credit card each year. See the Frequency Limit Table by Type of Tax Payment to determine which kinds of payments you can make and how often you can make them.
  • If you need to make a tax payment of $1 million or more via credit card, you may need to coordinate the payment with the payment processor. Check out the IRS's information on Making High Balance Payments for contact information.

Alternatives to Paying Taxes with a Credit Card

If a 0% APR credit card isn't an option, the IRS offers several payment plans for individuals and businesses. Depending on the interest rate on your credit card and how much you owe, an IRS installment agreement might be less expensive than paying with plastic. The IRS charges a lower interest rate than most credit cards.

You can learn more about the different installment agreement options and fees from the IRS.

In some circumstances, paying your taxes with a credit card might make sense. But most people are better off avoiding the processing fees and credit card interest with an IRS installment agreement. If you need help running the numbers, be sure to reach out to your tax advisor.

Form your business with LegalZoom to access LegalZoom Tax services.LEARN MORE
Janet Berry-Johnson

About the Author

Janet Berry-Johnson

A freelance writer with a background in accounting and income tax planning and preparation for individuals and small bus… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.