This spring we've heard numerous commercials showing how we can pick up thousands of airline frequent flyer miles by using a credit card to pay the tax bill. You can use an American Express, MasterCard, or Discover card, but not Visa. The IRS has authorized two companies to process credit card charges for federal taxes, Official Payments Corp. and PhoneCharge Inc., and you can arrange payment by phone or over the Internet. Numbers and addresses are on page 51 of the IRS Form 1040 booklet. New Jersey accepts credit card payment of your state taxes as well, although only through Official Payments.
Information is on the inside front cover of the tax return booklet.
Paying with plastic is certainly convenient, and the chance to have Uncle Sam foot the bill for a trip to Europe sounds inviting, but you should think twice before taking this route. So much for the free trip. Then there is interest, and that could add hundreds or even thousands of dollars to your original bill, depending how long you take to pay it off. About the only time payment by credit card makes sense is if you don't have the money now, but expect it shortly, perhaps when a CD matures or a company profit-sharing check arrives, or if you charge it to a card with a low introductory interest rate and will be able to pay it off within a few months. In addition, you'll pay interest.