ry three months. When you pay taxes that often, it really does start to seem like paying taxes is your part-time job.
The graphic below includes the three companies authorized to accept payment for your federal tax bill, as well as the fees they charge. In addition to federal taxes, you can also pay taxes owed to some states with a credit card. This is possible for both state income taxes as well as business taxes in states that offer this option.
One common reason consumers pay taxes with a credit card is the rewards they can earn. While you do have to pay a fee to pay your tax bill with a credit card, it’s not too difficult to findFor example, the three processing companies that accept credit cards for federal tax payments all charge less than 2%, with Pay1040.com charging only 1.87%. With that in mind, all you have to do is make sure you’re earning more than that much back in order to end up “ahead” when all is said and done.
Considering American Express Membership Rewards points can be transferred to airline partners like Cathay Pacific, Emirates and Singapore Airlines KrisFlyer for high-value redemptions in premium cabins, these points can be worth a lot more than you’re paying in fees in the long run.
Here’s a good example of how this might work. Imagine for a moment you owe $7,000 in federal taxes but don’t quite have the cash. In that case, you could sign up for a card like the, which grants cardholders an introductory 0% APR period on purchases and balance transfers, followed by a variable APR based on your creditworthiness.
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