Are You Concerned About Your Tax Bill?
Now that income tax time is approaching, our thoughts are turning to collecting all of our receipts, w-2 forms, and 1099s. Many people will have already paid enough taxes so they are not concerned about sending in a check, but just as many people, especially those of us with self employment income, are expecting to have a bill to pay.
Should we just say, “Charge IT”, to the IRS?
We do have choices in how we make our payments, and one of the recent, popular choices has been to charge them. But is it a good idea to pay taxes with a credit card? Well, for one thing, if you do not have the cash to pay the bill right now, that means you are going to have to make monthly interest payments to your credit card company. So you are, in a way, imposing a late payment penalty upon yourself. It is just that you won’t pay the penalty to the IRS, but to the credit card company.
Creative Charging Is Possible
However, some people do choose to benefit from charging their taxes, even when they have the cash to pay their bill. One man owed $10,000, and he decided to use a credit card that game him airline miles. He earned a round trip ticket to a domestic city, paid the bill off the next month, and felt as if he ended up ahead!
Using IRS Financing
If you do not have the cash to pay the bill, you can probably negotiate a better payment schedule with the IRS. They do provide financing options. You can visit the official IRS website to learn about financing options: http://www.irs.gov/businesses/small/article/0,,id=108347,00.html
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[...] a side note, if you cannot pay your tax bill, do not panic yet. You can charge your taxes to a credit card, or work out a payment plan with the IRS. It is important to file your taxes anyway, even if you [...]