Many taxpayers are not getting any good news when taxes this year drove their taxes – so much so that H & R Block employees have to play therapists with their clients.
For the more than 30 million taxpayers who actually owe money to the Internal Revenue Service this year, a credit card is probably not the best way to repay their tax bill.
The IRS has three card processors that are authorized to process debit or credit card payments – and all three charge a fee for these transactions. For credit card transactions, the fee is between 1.87% and 1.99%, with a minimum fee of $ 2.50. If consumers pay their taxes by check, there is no charge.
"In most cases, this will eliminate the rewards you would be earning," said Ted Rossman, industry analyst at CreditCards.com.
Before you consider how fast interest rates can be incurred when a consumer transfers his tax balance.
Another important point: Not all tax forms are suitable for card payments. Further information can be found on this IRS page.
See also: More Americans take longer to repay their credit card debt.
The following should be kept in mind when you are hunting for rewards.
Cardholders might come safely A little ahead of the reward perspective on certain cards. Especially the Citi Double Cash
C, + 0.77%
Card offers 2% for all purchases, which includes tax payments, meaning that cardholders would at least make a profit on the IRS card processing fee. This would also be the case for Capital One Spark Miles for Business
COF, + 0.81%
and the Blue Business Plus Credit Card from American Express
AXP, + 1.08%
If you set your tax return on plastic, you can also help if you've recently opened a new credit card and are trying to keep a certain spending amount to unlock an introduction Offer. For example, as a travel and finance website, The Points Guy writes Chase's Ink Business Preferred Credit Card
JPM, + 0.07%
offers new cardholders 80,000 bonus points after spending $ 5,000 within three months of opening their account. Given how big the hurdle may be, a large fee such as a tax bill would make a big contribution to reaching that mark.
Travel cards like the JetBlue Plus Card can also be used
JBLU, + 1.38%
or the Hilton Honors Ascend Card
American Express's + 0.82%
offer special rewards once consumers have reached a spending threshold – the status of the Mosaic Elite on the first card and a free weekend night with the Hilton card.  All in all, however, the benefits associated with the reward disappear when a cardholder does not fully pay his tax balance. Credit card rates are, according to CreditCards.com, at an all-time high of 17.64%.
For example, if a consumer with a 15.59% interest rate credit card pays $ 4,000 in taxes and then pays that amount over 12 months, they will spend over $ 80 on the IRS plus credit card charge pay more than $ 350.
In other words, if you use the tax payment as a reward strategy, it is important to have enough money on the internet bank to cover the bill.
Read More: Consumers Have Requested the Least Number of Loan Requests Since 2003 – Why This Is Worry
Next you should do if you can not afford to pay your tax bill pay.
Some consumers of course want to use their credit card as a way to pay off their taxes over time if they do not have enough money in the bank when it's time to file an IRS application by submitting a 9465 form with the return (either on 15 April or 15 October, when a taxpayer applies for renewal). Consumers may propose their own terms of payment and propose a maximum repayment period of 36 months. Generally, these applications are automatically approved if the taxpayer owes less than $ 10,000.
If you choose this route, you will be charged a user fee of $ 31. For your remaining unpaid balance, you will be charged 0.25% interest per month. If taxpayers do so, they will not be able to apply for installment payments on their taxes the following year, unless their bill has been fully paid off.
The only alternative people who want to consider the IRS installment plan can take this into account. The fee is much lower than commercial lenders. She puts her tax bill on a credit card with an interest rate of 0%. "If you're disciplined about your payments, the 0% credit card is your best bet," said Rossman.