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Many people aren’t aware of this, but paying your taxes with a credit card can cost you a lot more money. The IRS (International Revenue Service) offers people who owe taxes to pay by credit card, but this option comes with a lot of extra fees.

Usually merchants will have to pay a processing fee for accepting credit cards. The fee will normally be calculated in the prices of services or goods. The IRS however does not need to pay any of these fees. The Taxpayer Relief Act, gives the Treasury authorization to accept payments made with credit cards for federal taxes, however it does not allow the IRS to pay fees to credit card companies for processing transactions.

The IRS-authorized third party company will handle the payments made by credit card. Then they will charge an extra convienience fee which will cover their cost of accepting your credit cards. The fees can range from 1.90% up to 3.93% of the amount you have paid, and if you don’t pay off your balance in full, you will start to rack up interest charges.

For these reason it is not advisable to use credit cards for federal tax payments.

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