Last Updated Apr 18, 2011 10:18 AM EDT
If you are short on cash and need more time to pay what you owe, the IRS offers these tax payment options.
But if you don't have the cash on hand this week, but expect to have it in a few weeks, or so, you might consider paying your taxes using a credit card.
Paying taxes by credit card is available at which is available through providers such as Official Payments Corporation and PayUSATax. You can charge your taxes on your VISA, MasterCard, Discover or American Express card. The benefits are that this is safe, secure and convenient. You can also earn rewards offered by your card for things like airline travel or cash back.
But using this option is no free lunch. The costs include hefty convenience fees.
Since the IRS does not pay the credit card company a merchant fee, the credit card company has to get their piece of the action by charging you a convenience fee of over two percent.
If the amount of taxes you owe is $3,000 and you pay by credit card, the convenience fee for charging your federal taxes could be about $70. Charge $10,000 and the fee would be about $235. Charge $40,000 (the amount to qualify for a free airline ticket on some airlines) and the fee is about $940. This fee would typically be more than the cost of buying that ticket outright, so the rewards are not worth the fees.
Also, if you don't pay your credit card balance in full you could end up paying hundreds of dollars of interest. So the fees and interest costs in connection with paying your taxes using a credit card can be more than the costs of the other tax payment options offered by the IRS.
The bottom line is that making a partial payment of what you owe and filing an Installment Agreement Request is better than not filing and subsequently incurring IRS penalties for late filing and late payments.