Why you ought to avoid paying your income tax with a credit card

We all concur that the credit card is extremely convenient. That is why the IRS permits you to pay your taxes through it. To sweeten the offer, credit card companies offer rewards in the form of regular leaflet miles. So you can get a complimentary air ticket too. However hang on, is that convenient to your pocket too? Regretfully, the response is no. This post is written to point out why you might want to avoid paying earnings tax with a charge card.


 

Disadvantages

The IRS has actually licensed third-party companies to process your credit card payments. However, you, the taxpayer needs to pay for it. So, every time you utilize your credit card to pay taxes, you likewise have to pay a charge that is normally around 2.49 % of your tax. Therefore if you are paying $18,000 in taxes, you also pay an extra charge of around $450.
 

Now add the cost charged by travel rewards credit cards and you can drop the second letter from the word 'totally free as in complimentary airline ticket.


If you owe money, the last thing you want is more debt. Annual interest charges are quite high, even going up to 30%. You might invest the rest of your life spending for the $18450' convenience.' If you are in debt with numerous charge cards, this additional financial obligation can result in personal bankruptcy. But even that can not save you. According to law, you still have to pay taxes in addition to other payments like child assistance or alimony.


It is for these factors that customer companies like the Association of Independent Consumer Credit Counseling Agencies (AICCA) recommend alternative methods of paying income tax. You might dip into your savings bank account or take a loan at a lower rate of interest.
 

There are only two conditions under which this transaction looks great. You pay the IRS with your charge card and concurrently pay off the credit card company as well. By doing this, you prevent the interest payments, if it is any alleviation. The other condition is that if it is impossible for you to meet the IRS due date. While the IRS can grab the majority of your possessions immediately, your credit card company can not. While the case remains in court, you might just win a lottery game or inherit a windfall!