Your taxes are done, and you owe money. So now the question is how to actually make the payment—and what’s the easiest option? You have several choices for electronic payments to the IRS, and each option has pros and cons.
Paying Your Taxes With a Credit Card
Paying your taxes with a credit card is convenient, but it’s easy to lose any benefits that a credit card provides.
One of the biggest draws to pay your taxes with a credit card might be the ability to earn rewards or travel points. Unfortunately, those points may end up costing more than they’re worth. Evaluate fees and interest on the tax payment carefully before you type in your card number.
Expect to pay roughly 2% of your total tax bill (or more), which adds about $20 for every $1,000 you owe. To come out ahead, you need to earn more on your card than that. What’s more, your card issuer may charge additional fees, as these payments may be categorized as cash advances—not standard purchases. If you pay with a debit card instead, you might pay less. That said, if you get a significant bonus by meeting a high initial spending threshold (when you first open the card, for example), it could be worth the fees.
Borrowing on Your Card
A credit card is probably not the best way to borrow unless you have a 0% annual percentage rate (APR) promotion—and you pay off the debt before the promotion ends. The IRS allows you to make installment payments on tax bills (although this may cost extra), or you could use a personal loan to get the funds you need (see our monthly payments calculator below).
Where to Pay
The IRS has relationships with several payment processors highlighted at IRS.gov. Those services should be among the safest and most reliable online payment options available.
Other Ways to Pay
You can also send money to the IRS directly from your bank account, via an e-check. Direct Pay allows you to use a checking or savings account, and there are no payment processing fees. If you’re thinking of paying with a debit card, this may be a suitable alternative: Either way, the funds come out of your checking account.
The Electronic Federal Tax Payment System (EFTPS) enables you to pay all forms of taxes to the IRS electronically, including personal taxes. If you own a business, this may be particularly helpful for quarterly payments and other types of tax payments, and you can take advantage of the same online system for personal and business payments. To send funds, you link a bank account, and there are no fees for using the service.
For state and local taxes, you may have additional options. Your state and local governing bodies likely offer online payments, with each taxing authority using its own payment system. To find those solutions, search for online tax payment options and include the jurisdiction you want to pay. You may also see options for online tax payments on any billing statements you receive.
The options above primarily cover online payments for your personal taxes. If you run a business, you likely owe additional taxes, and you might need to pay a variety of organizations.
If you aren’t sure where to start, ask your state’s Secretary of State for guidance on taxes in your area.
Your business can use EFTPS to make federal tax deposits and other payments online. For example, you might use Form 941 to pay quarterly taxes, and EFTPS is an excellent choice for those payments. Be sure to sign up long before your tax payment is due—you’ll need to enroll, set up your bank account, and verify your identity before you can make a payment. You may need to pay with a paper check for a few cycles while you wait.
State and Local Taxes
Your business might pay additional types of taxes to local governing bodies. Those entities likely accept online payments, but be sure to review fees and other features before deciding on anything. You may be able to pay sales taxes, unemployment premiums, state income tax withholding, and other charges.
In addition, some agencies are not fully online, so you might only be able to complete some tasks online. For example, you might be able to pay a tax electronically, but you still need to mail in forms to complete your filing. Make a checklist for yourself (or your staff who handles the payments) so you know how each process is handled.
Is It Safe to Pay Taxes Online?
Online tax payments are generally safe, but providing your card number or checking account information always carries some risk. The IRS and any affiliated payment processors use industry-standard security, as does any reputable merchant.
Before you give anybody your account details, it’s best to start from the IRS website (IRS.gov). Avoid clicking any links in emails or advertisements, and use extreme caution when finding payment options through a search engine. At the time of this writing, the IRS partners with Pay1040.com, PayUSAtax.com, and OfficialPayments.com for debit and credit card payments.
- You can pay taxes online, and electronic payments might be the fastest and most convenient option.
- Watch for fees before you commit, and choose your payment method with costs in mind.
- Borrowing money by way of a credit card to pay your taxes can be problematic and is not sustainable.
- Transfers from your checking account tend to be the least costly payment choice.