A Complete Guide To Paying Your Federal Taxes With A Credit Card, Updated For 2021

Updated for 2021. The major change was Pay1040 increasing fees from 1.86% to 1.99% for credit card payments, making it no longer the cheapest option.

It’s that time of the year again, time to pay taxes! For a lot of people, this is their biggest expense of the year and wouldn’t it be great if you could pay your taxes with a credit card? Well as the IRS website clearly states, you can.

Disclaimer: We’re not accountants, this does not constitute tax advice. Please consult a tax professional.

The Basics

The Tax Payer Relief Act of 1997 allowed the IRS to accept credit & debit card payments (under section 6311(a)) and payments were able to made from January 1st, 1999 onwards due to this temporary act. The IRS has authorized three third party providers to process tax federal taxes on their behalf: Pay1040, PayUSAtax & ACI Payments (formerly Official Payments). The reason why the IRS doesn’t process credit cards directly is they are forbidden from charging fees directly for these services due to other federal laws. None of the money these providers collects goes to the IRS and some of these providers can also be used to pay State taxes (we’ll cover this in another separate post).

In this guide we’re going to assume you have the cash to pay your credit card in full, if you don’t have the ability to do this then paying with a credit card is a terrible idea due to the high interest rates credit cards charge. If you can’t pay in full then you’ll most likely be better off with a payment plan/installment agreement with the IRS, more information on this can be found here.

Obviously all these third party providers charge fees (ranging from 1.9% to 2%), those fees are what we look at first.

Another option is to use the Plastiq bill payment service. Plastiq allows paying any bill, including tax payments, with a credit or debit card.


Obviously all these third party providers charge fees (ranging from 1.96% to 1.99%), those fees are what we look at first. We’ve also included the fees for debit card payments and digital wallet payments.  According to Way Back Machine, the fees have been very similar for awhile now (actually mostly getting slightly cheaper since 2012).

 Debit CardsCredit CardsDigital Wallet
Pay1040.com$2.58 flat fee for consumer/personal cards and 1.99% for all other debit cards (minimum $2.58)1.99% (minimum $2.58)See debit/credit card fees
PayUSAtax.com$2.55 flat fee1.96% (minimum fee $2.69)See debit/credit card fees
ACI Payments (formerly OfficialPayments.com/Fed)$2.00 flat fee ($3.95 for payments over $1,000)1.99% (minimum $2.50). AmEx over $100,000 is 1.9%See debit/credit card fees

There are higher fees if you use any tax preparation software, those can be viewed here.

As for Plastiq, the standard fee is 2.85% for Visa, Mastercard, Discover or Amex.

Making It Worth It

High Cash Back/Rewards Cards

As you can see, PayUSA is the cheapest option at 1.96%. Even if you used a credit card that earned 2% (e.g Fidelity Visa or Citi Doublecash) you’d only be making 0.04% profit. Even if you had to pay $10,000 in taxes, you’d be earning $200 in rewards but having to pay $196 in fees for a profit of $4. Not exactly worth it. Now if we could reduce our fees, then we might be onto something.

Claiming The Fees On Tax

On the IRS page you’ll notice the following (emphasis mine):

The fees vary by service provider and may be tax deductible

Personal Taxes

Update 2018/2019: Looks like 2%+ miscellaneous deduction option is gone effective 2018.

Nothing like something vague and ambiguous to give to confidence that you can claim these fees as a deduction. In 2009, the IRS introduced a new law that allows some people to deduct these expenses when you file electronically. You can view their statement on this on the official IRS website. Here is what you need to be aware of:

  • Convenience fees associated with payment of federal tax can be included as a miscellaneous itemized deduction
  • Only those miscellaneous expenses that exceed 2% of the taxpayer’s adjusted gross income can be deducted

You can view what the IRS considers a miscellaneous expense here. But for most people I doubt they will exceed 2% of their adjusted gross income. So there goes that idea.

Business Taxes

Things are a little clearer for business taxes, they state:

  • For business tax types, the fee is a deductible business expense.

Meeting Minimum Spend Requirements

As easy manufactured spending methods dry up, more and more people are happy to pay a fee to meet minimum spend requirements. That’s because they usually have large sign up bonuses relative to the minimum spend requirements.

Splitting Payments

If you owe $10,000 in taxes, then chances are you don’t want to be paying $187 in fees just to meet one minimum spend requirement (especially since most of them only require ~$3,000 or less in spending). Thankfully the IRS allow you to split your payments up, how many times you can do this depends on what sort of tax you’re paying. They provide a full table here.

If you use Plastiq, there is no limit to the amount of payments you can make. You’ll pay with a card, but each payment will be sent to the IRS via mailed check. The limits given by the IRS are only for card payments, not check payments.

Our Verdict

I think paying your taxes with a credit card is generally not worth the effort involved, unless you want to meet a minimum spend requirement and are happy to pay the fees involved. Even using a 2% card doesn’t net much profit unless you have a massive tax bill. Liquidating prepaid gift cards could still be worthwhile for some.

Feel free to ask other questions below and I’ll update the F.A.Q as we go along. Also remember that we’re not tax professionals, please consult with one of them relating to anything tax related.


Do Any Credit Cards Code Any Of These Sites In A Bonus Category?

Your payment will be broken down into two different payments:

  • Your actual tax payment will show as “United States Treasury Tax Payment”
  • The convenience fee charged will show as ” Tax Payment Convenience Fee”

As far as I know no credit cards will earn a category bonus on this purchase. It’s possible that they do.

Can I Use Visa/Mastercard/American Express Gift Cards To Make A Payment?

Some people have had success in doing this in the past, apparently Official Payments allows you to use more than two debit cards when paying over the phone. Just keep in mind you’ll be paying a $2.25 fee per card. I have no idea if this still works or not.

Will I Be Charged A Cash Advance Fee?

As far as I’m aware, no major credit card issuers charge a cash advance fee. This is confirmed by the websites of each of the payment processors:

Post history:

Update: We’ve updated this post to make it relevant for 2020, hope you enjoy! One thing to note is that the IRS is no longer prevented from fees for processing credit/debit cards directly under 26 U.S. Code § 6311(d)(2) as amended. This won’t make a difference for this tax year, but might make things interesting for 2021. Hat tip to reader Superman


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DP for Biz Plat SUB

1 – Submitted two IRS payments via PayUSATax
2 – Taxes Filed with overpay claimed as 2020 Tax Payment made in 2021
3 – Tax refund received via DD (including overpay)
4 – 100,000 MR points post to account
5- Cash out for $1250 via Schwab

Total cost to complete SUB after fees: $5.93


So you chose to pay “Form 1040 Current Tax Return 2020”, then filed tax return? Since It was not 1040-ES, how/where did you report this payment on your tax return?


If I want to take advantage of the Spend $500 get $25 back Amex offer and I owe $3,000 in taxes, can I split 6 different payments of $500 each (2 times on each of the 3 payment service providers)? I’m a little confused on the Frequency Limit Table by Type of Tax Payment on the IRS site limiting to 2 payments per year on the 1040 form.


2 payments per processor per tax type


Where does it say 2 per processor? This would mean that I can make 6 total credit card payments on my 1040, given that there are 3 companies which process these payments?


Curious if anyone has any experience with overpaying using form 1040, not form 1040-ES? I don’t see any place to note this on my tax return. There is a place to note Form 1040-ES payments and Form 4868 payments but nothing for Form 1040. I am wondering if those overpayments will be automatically applied to my tax return.


ACI (OfficialPayments) isn’t accepting Discover debit: “Commercial cards cannot be used to pay personal federal taxes. Please use a different card or payment method.”
Pay1040 also doesn’t consider it a consumer/personal debit card and charges the higher rate.
PayUSATax appears to accept it at the debit card rate, but I didn’t actually complete the transaction yet.


What are some of the higher numbers people have done for overpayments, I mean for total refund?


i pay my taxes on these services with the paypal debit card which pays 1% cash back on all purchases and has a max daily limit of $3000 so that means $30 cash back for each payment less the $2.55 fixed debit card fee – better than nothing! (sorry for the double posting)


Does the paypal debit card still give you the 1% for tax payments like at paytaxusa, pay1040, etc?

Abby Normal
Abby Normal

So I’m not going to actually file my until early April, but can I make a payment towards it now?

Like if I know I’m going to owe ~$2000, can I make a $1000 “1040 current year” payment now, file in April, then make the other $1000 payment? Wondering if I’d have to note that on my return mainly or if they’ll be able to figure out what I’ve done on their own.


Yes, you can do that. I don’t think you need to note anything on your return.


You need to put it on your return, so that it correctly calculates what you still owe.


2020 ES payments are not available today (02/01/21), which means it has concluded yesterday (01/31/21)
To summarize based on the data points below: You can make a total of 40 online payments per tax year:
1) 28 payments using the Form 1040-ES for 5 periods:
– 03/01/20 – 05/14/20
– 05/15/20 – 07/14/20
– 07/15/20 – 10/14/20
– 10/15/20 – 12/31/20
– 01/01/21 – 01/31/21 (available on PayUSAtax and ACI Payments only)
2) 6 payments using the Form 1040 before the deadline 04/15/21.
3) 6 payments using the Form 4868 before the deadline 04/15/21.


Do you report the 4868 payments in the same part of your tax software as 1040-ES or 1040 payments? I don’t see a place to specifically note 4868 payments.


TurboTax desktop has it under Other Income Taxes -> Payment with 2020 federal extension. For TurboTax Online or other software, I’m not sure.


Thanks! I found a similar area in HR Block which is what I use.


Note that Chase is now saying effective April 7, 2021 (April 16 for business cards) the following transaction is a “cash-like transaction” and will be treated as a cash advance: “making a payment using a third party service including bill payment transactions not made directly with the merchant or their service provider.” So, be careful.


How long does it take to get an overpayment back? Does it have anything to do with when I file my taxes this year?