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Paying your taxes by credit card? Beware the fees

Published April 10, 2013 9:57 pm

Personal finance • Convenience has a price, charge by charge.
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The Tribune is providing down-the-stretch tips and reminders to help you complete the right forms, apply for all the deductions and credits you can, and get your tax filings in on time by April 15.

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.

Full instructions on paying your tax bill by credit card are online at IRS.gov.

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.


Twitter: @jnpearce —

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






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