What Happens when the Payment to go with your IRS

What Happens when the Payment to go with your IRS Tax Return gets done with a Credit Card?

When you pay your taxes with your IRS tax return, can use your credit card? The short answer would be yes; but then to us who are spoiled by the practice among retail merchants that they don't pass their transaction fees on to us, it can be a bit of a nasty surprise what happens when you use your credit card with the IRS. They pass the fee over to you. The first thing you need to know about paying your taxes with your credit card is - you're going to be paying even more than you otherwise would.

For some funny reason, this tax season, the credit card companies are advertising how providing payment for your IRS tax return by credit card can be a great convenience. They are even giving you discounts on the electronic tax filing products that you may use, if you choose to pay with plastic. Here are all the fees that you commit yourself to paying if you take their advice.

Why exactly does the IRS not absorb the 2% processing fees like all regular merchants do? It's because there is a law that prohibits the IRS from paying anything to transaction processing companies. The IRS itself doesn't charge you anything; they just pass on to you the cost of processing a credit card. You pay those fees directly to the card processing company. How much does it amount to? Let's say that your fees are about 2.3% - which happens to be the most common number. At that kind of rate, to pay a $2000 tax bill, you would actually be paying $2046. Each one of the credit card processing companies, RBS WorldPay and others, charges a different kind of they. You'll need to actually go to one of these websites to check out how much they charge.

What happens if you choose to pay with a debit card? With a debit card, you are charged on a transaction basis. If yours is an approved credit or debit card, you normally have to pay $4 in charges. Normally, before you file your IRS tax returns, you need to make sure that you really understand what you're doing paying by card. They have an online calculator that helps you not make the wrong choice. And don't forget, just because you are paying the government doesn't mean that you get excused from paying interest on that money.

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