DON’T put it on a credit card!
Uncle Sam makes it extremely easy to make tax payments on your favorite credit card. However, there will be a processing fee of 1.88% up to 2.35% just for your credit card payment, not to mention HIGH credit card interest rates.
According to the IRS website, “you can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately. However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full. Before you apply:
- File all required tax returns;
- Consider other sources (loan or credit card) to pay your tax debt in full to save money;
- Determine the largest monthly payment you can make; and
- Know that your future refunds will be applied to your tax debt until it is paid in full.”
There are fees to the IRS for setting up an installment agreement through them, but the interest rates still remain low.
The video below gives more details on paying your taxes to the IRS:
Ultimately your withholding should cover the taxes you owe – if you either have to pay or receive a HUGE refund, you may want to revisit the withholdings. Always consult your tax advisor or CPA when you have questions.
And always consult the Spring Bengtzen Real Estate Team with your real estate questions. Our goal is to be informative and helpful. Through our service we hope to earn your business with our exemplary level of service and extensive local knowledge of the Northern Utah area.