Can You Pay Taxes on a Credit Card?

It is possible to pay federal taxes, and often state and local taxes, using a credit card. This payment method typically involves a third-party payment processor, which facilitates the transaction between the taxpayer and the tax authority.

Understanding Payment Options and Associated Fees

The Internal Revenue Service (IRS) and state tax authorities do not directly process credit card payments. Instead, they rely on approved third-party payment processors to handle these transactions. These processors accept a range of payment methods, including credit cards, debit cards, and digital wallets.

A convenience fee is charged by these processors for their service, which is separate from the tax amount owed. This fee is a percentage of the payment and is paid directly to the processor, not the tax agency. For credit card payments, these fees typically range from 1.75% to 1.85% of the payment amount, with a minimum fee of about $2.50.

Fees can vary among the different approved processors, so comparing them before making a payment can be helpful. Debit card payments usually incur a flat fee, often between $2.10 and $3.95, regardless of the payment amount. For business tax payments, these convenience fees may be tax deductible.

Identifying Eligible Tax Payments

Most federal individual income tax payments are eligible to be paid using a credit card. This includes amounts due on a filed tax return, estimated tax payments, payments for tax extensions, and prior year tax liabilities. Some federal business taxes may also be eligible for credit card payment, though federal tax deposits generally are not.

The eligibility of credit card payments for state and local taxes varies by jurisdiction. Many states offer the option to pay various types of taxes, such as individual income tax, estimated taxes, and business taxes, with a credit card. However, it is important for taxpayers to verify directly with their specific state or local tax agency to confirm accepted payment methods and any associated conditions.

Making Your Tax Payment

To pay your taxes with a credit card, the first step involves selecting an IRS-approved payment processor. The IRS provides a list of these authorized processors, such as ACI Payments, Inc. and Pay1040, on its website. Once a processor is chosen, navigate to their dedicated website or platform to initiate the payment.

On the processor’s site, you will be prompted to provide essential tax payment information. This typically includes the tax type, the relevant tax year, the amount you wish to pay, and your identifying number, such as a Social Security Number or Employer Identification Number. You will also enter your credit card details to complete the transaction.

Before finalizing the payment, carefully review all the entered information, including the convenience fee charged by the processor. After confirming the details, submit the payment. The processor will then provide a confirmation number, which should be retained for your records. The payment date is generally considered the date the transaction is authorized by the processor. The payment will subsequently appear on your credit card statement and be reported to the tax authority.