Paying your taxes by credit card? Beware the fees
Countdown Tip No. 4: Watch out for fees when paying taxes by credit card
Not everyone gets a tax refund.
Plenty of taxpayers owe money to the Internal Revenue Service, and one way to clear that tax bill is with plastic.
Paying taxes with a credit card is safe, as easy as a few clicks on the keyboard and may seem like a smart move, especially if you get airline miles or other perks from your card company.
But remember, convenience comes with a price. Putting your tax debt on a credit card isn't free. Even if you pay off your credit card balance every month, there are fees associated with the tax-paying transaction:
Third-party processing fee: Depending on which service provider you choose, it could cost an additional $2.99 to $3.95 to pay with a debit card, or from 1.88 percent to 3.93 percent of the tax bill to pay with a credit card. That means on $1,000, you'll pay an extra $18.80 to $39.30 to a third party to process the payment.
Tax software fee to e-file: If you're filing your taxes electronically using tax software, it could cost from 2.49 percent to 3.93 percent extra, plus a convenience fee. For instance, if you e-file using TurboTax, owe taxes and pay by credit card, you would pay an extra 2.49 percent, plus a minimum convenience fee of $3.95.
Note that paying off more than $100,000 may require special attention from the service provider and that you can't make federal tax deposits or get an immediate release of a lien with an e-payment.
And remember, you could save the processing fees by simply paying in person or by mail (go to http://www.irs.gov/uac/Contact-My-Local-Office-in-Utah for IRS locations in Utah).
Coming up tomorrow: How saving for retirement can cut the taxes you owe.
Countdown to April 15 last-minute tips
Haven't filed your taxes yet? Check out The Tribune's Countdown to Tax Day series with information that can help as the deadline approaches:
April 4 • Where to get free help
April 5 • How to avoid tax scams
April 6 • The joys of filing electronically
Sunday • What's the Earned Income Tax Credit?
Tuesday • Don't miss out on the Child and Dependent Care Credit
Wednesday • Understand your taxes if you're self-employed
Today • Watch out for fees when paying taxes by credit card
Friday • Reduce your taxes by saving for retirement
Saturday • Use the Taxpayer Advocate when tackling the IRS
April 14 • Don't ignore your taxes; file an extension to get more time