To Pay or Not to Pay: Is it a Good Idea to Pay Your Taxes with Your Credit Card?

Not many people associate rewards with paying taxes, but several leading credit card companies are working toward changing our way of thinking.

It is not uncommon for reward credit cards to offer double reward points for certain purchases. Some, for example, provide double points for making purchases at certain types of stores, such as grocery stores, home improvement stores, and gas stations. Yet others provide double points for shopping with certain merchants, such as online with Amazon.com or for buying coffee at Starbucks.

More recently, some credit cards have extended this concept by offering double rewards points to cardholders who pay their taxes online. As with all deals, there are certain restrictions. In addition, not all credit cards offer double rewards. In fact, some charge a fee for paying your taxes with your card. Therefore, you should check with your card before selecting credit as a payment option. In addition, don’t think about purposely manipulating your taxes so you owe the tax man a great deal of money at the end of the year – these cards have caps in place in regard to the amount of points you can earn.

You also need to consider the trade off involved with paying your taxes with a credit card. While your card may provide you with rewards, you will have to pay a convenience fee to the web sites that process these payments. At both sites, Link2Gov and OfficialPaymentsCorp, you will have to pay around 2.49% for the convenience of paying with your card. So, consider carefully and choose the option that pays off in the end.

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To Pay or Not to Pay: Is it a Good Idea to Pay Your Taxes with Your Credit Card?
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