Not only is it possible to pay tax with a credit card, but it’s also convenient and may be the best way to pay when you want to keep track of all your tax payments. From income tax payments to the federal and state governments to payments on estate and property taxes, it’s sometimes the easiest and most convenient way to take care of your tax obligations.
At one time, all tax payers mailed in their forms and payments. As you can guess, this process required an enormous amount of manpower, so your payments may have been marked late even if you mailed them in on time. Whether you were late or on time was also difficult to prove since you could have written a check and never mailed it, so your records didn’t necessarily indicate that you actually made the payment.
Credit cards offer several different benefits when it comes to taxes.
For one thing, the transfer is almost immediate, so you don’t have to worry about human error. For the most part, it’s all taken care of electronically, with multiple data signatures to prove your efforts.
Then, there is the record keeping benefit. Some tax payments are tax deductible, so it’s important that you maintain a record of them. You don’t necessarily have to use your credit card statement either, because you will most likely get an email or some other form of digital confirmation. Depending on which taxes you paid, you may even be able to deduct the fees associated with processing the payment.
What is likely the most convenient part of using a credit card to pay tax, is that you can take care of it immediately, without even leaving your desk. Because you aren’t at immediate risk of losing anything or having something shut off, it’s easy to forget tax payments. But, when you pay them as soon as you file or get the bill, you don’t have to worry about it. On top of that, you can use credit to make the payment so you are no longer in debt to the government—a situation no one wants to be in. Instead, you just make your credit card payment as usual.
There are a couple of different ways you can pay your income taxes with a credit card or debit card. If you use a third party service like Tax Slayer or Turbo Tax, you can make your tax payment at the same time as you pay for your tax preparation. Some services take the payment right out of your collective fee and process it for you. Others direct you to the link where you can pay your taxes as a separate debit.
If you aren’t using tax filing software or you have used a different method to file, the IRS offers several options where you can make your payments. The key is to go through one of the payment centers listed on the IRS website. Keep in mind that if you do a search for places to pay your income taxes, you always need to use the one that ends in “.gov.” That way, you know the IRS has an arrangement with the site and you can limit the amount of third party fees that you pay.
It can be more convenient to pay other types of tax with your credit card, besides just federal income taxes. In fact, because there are so many payments that you likely need to keep track of, you can alleviate some of the stress and hassle of remembering these payments by paying with a credit card. Other types of taxes you might want to consider using your credit card or debit card to pay, include the following:
Don’t forget how easy it is to set up recurring payments when you use a credit card. This method works wonders when you just want to get your check and move on with life rather than dealing with the same stress every week or month. If you owe the government tax money, you can set up automatic debits from your credit card so that the payment comes straight out without you having to worry about it. You can’t spend what isn’t available, so you’re never at risk of spending money that should be applied toward tax payments.
Credit and debit cards aren’t just more convenient when it comes to taxes, but they also offer easy ways to track your expenses and divide them into different accounts. Budgeting is easy when you know exactly where the money is coming from and going to. When you start to wonder where extra expenses come from, all you have to do is look at your billing statement to figure out where to cut back or if you need to adjust your credit line.
In the meantime, even if you’re just doing things like making tax payments with your credit card, you’re also building your credit history. So, can you pay tax with a credit card? You certainly can, and if you want to organize your finances and build your credit, you probably should pay your taxes with a credit card.