With the IRS tax deadline approaching, some U.S. taxpayers are rushing to complete their 2015 personal tax returns and pay the money they owe. While some will mail in personal checks, others will turn to the Internet to make an online payment via debit or credit card, but consumers are urged to note what fees may be charged if they do so.
The IRS cannot legally pay any transaction fees on credit card payments. Because of this limitation, all taxes paid via credit card are done so through a third party, not the IRS itself. This means payers will be charged a convenience fee in addition to the transaction fee. For those who owe very little, this fee may be less than $3.00. However, those who owe more may pay as much as 2.25 percent of the amount owed. Each third party vendor charges different rates, so users should read all the information provided before entering their credit card details.
Those who are short on funds and unable to pay their taxes before the April 18 deadline may be tempted to pay by credit card. Experts warn, however, that the transaction fees plus the credit card company’s interest charges could actually be more than the IRS would charge to set up an installment plan. Those who plan on applying for credit in the near future may also want to rethink their plan to pay their taxes on credit since it will increase their overall debt.
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