There are two inevitable things in America â€“ death and taxes, you know. And some people at times would rather choose the first. A federal income tax in the US eats up quite a sufficient part of your earnings. Russians, for instance, have 13% income tax rate. But still the tax evaders’ rate is pretty high over there.
Some of the top US credit card issuers decided to sugar the bitter taste of tax payers’ money loss.American Express and Discover now offer rewards points, cash back, or airline miles for those who pay income taxes with their credit cards.
AmEx offers 1 Membership Rewards point for almost every dollar charged for your tax. Chase United Mileage Plus Visa rewards program gives you even more miles, cash rebates, and points. And it seems to be really great. Now you can get rewarded not only for making purchases but for being a diligent taxpayer. But let’s take a closer look at this service. Is paying taxes with a plastic actually so convenient and profitable?
Well, you do benefit. First of all, you do not have to deal with cash paying taxes, and second, you collect points or miles with the help of this payment method. You can make a payment by phone, via Internet, or through e-file. You do not have to worry about security. It is quite safe. You will not need to disclose your card number to the IRS, and the payment information you give will not be revealed to anyone. No one but you can be authorized to process the transaction.
But as you well aware, there is no such thing as a free breakfast. You will have to pay for the conveniences of paying taxes with a credit card. The convenience fee. The convenience fee for charging tax bills on credit cards usually makes up 2.49% of the tax amount you pay. There are two third-party processors that are eligible to accept credit card payments â€“ Official Payments Corp. and Link2Gov. They have a license issued by federal government. And they charge different fees.
You will save on a convenience fee paying with a debit card issued by bank with the Visa or MasterCard logo. Link2Gov has a flat rate of $ 2.95 on debit cards. If you want to use your credit card to pay your tax, it will cost you 2.49% of your tax. The same with Official Payment Corp. So, you can profit paying with a debit card.
However, debit cards do not enable you to get any type of rebates for tax payments. Credit cards participating in the program of giving rewards for tax charges on a plastic, allow you to accumulate Membership Rewards.
So, it is up to you whether you want to pay Uncle Sam in old grandfather’s way, or keep pace with technical progress and get rewarded for paying taxes.