pay your taxes with a credit cardWhile this information was accurate at the time this post was published, these cards’ offers and perks may have expired or changed over time. Visit our reviews of the best credit cards to find the right card for your needs.

Tax season is in full swing, which means if you owe money to the IRS (or think you’ll owe), you’re probably wondering which options are available to pay your taxes. While you can set up a payment plan with the IRS, there are some instances when paying your taxes with a credit card is actually your best bet. Keep reading as we detail how the IRS’ payment plans work and explain when a credit card is a better choice, or click here to view our list of the best credit cards for paying the IRS.

Setting up a payment plan with the IRS can be costly

When you owe money to the IRS, you have multiple repayment options. A number of taxpayers who are unable to pay in full right away may qualify for a 120-day short-term agreement that requires them to pay in full within 120 days. There is no fee for this agreement, but if you don’t pay the amount in full, you may accrue interest and any applicable penalties.

If you want a longer-term payment agreement with the IRS, you have some payment plan options, but know that they come with some fees. Individuals who have filed all required returns and owe $50,000 or less in combined individual income tax, penalties and interest, along with businesses that have filed all required returns and owe $25,000 or less in payroll taxes may be eligible to apply for an online payment agreement. If you’re approved for an online payment plan, you’ll pay 4% interest on your owed amount — these rates are announced every quarter — and one of the set-up fees, with the cheapest one being $31 for setting up a direct deposit agreement online. It should be noted that if you don’t qualify for an online payment agreement, you can set up other installment agreements with the IRS.

When paying with a credit card is a better choice

Many people don’t realize that you can pay your taxes with a credit card. Although you have to pay a credit card processing fee — the cheapest one is 1.87% — if you use a credit card with a long 0% intro APR on purchases, you will not only settle your bill with the IRS, but also pay off the your tax bill interest-free. Keep in mind, that in order to pay your taxes interest-free, you must pay off the balance before the credit card’s 0% intro APR runs out. The best way to determine if a card’s 0% intro APR period is long enough for you is to divide the total owed by the length of the card’s 0% intro APR and decide if that monthly payment is manageable. For example, if you owe the IRS $2,037.40 ($2,000 plus the $37.40 credit card processing fee) and you’re considering the Citi Simplicity Card – No Late Fees Ever (a NextAdvisor advertiser), which has an 18-month 0% intro APR on purchases and balance transfers, as detailed below, you’ll to divide $2,037.40 by 18 to get a monthly payment of $113.19 — meaning if you pay this amount per month and don’t charge anything else to the card, you can have your total tax bill paid off in 18 months.

On top of paying no interest, there is another major perk to paying with a credit card: if you use the right one, you can earn rewards for paying the IRS — yes, you read that correctly. The key is to use a rewards credit card that either earns 2% back on all purchases, or 1.5% back and offers a generous intro bonus — that way you can balance out (and then some) the processing fee you’ll pay the IRS. For example, if you pay your $1,528.05 tax bill ($1,500 plus the 1.87% processing fee) with the Chase Freedom Unlimited card (detailed below), you’ll earn a total of $22.92 cash back (1.5% back) and get a $150 intro bonus because you spent at least $500 on purchases in the first 3 months. When you subtract your total cash back ($172.92) from your total IRS bill ($1528.05), you’re only spending $1,355.13 on taxes! What’s more, this card has a $15-month 0% intro APR on purchases, so you have plenty of time to pay off the balance. Since not all cards are worth using on your IRS bill, we detailed the best for avoiding interest and the best for rewards (if you plan to pay in full).

Best credit cards for avoiding interest

Long 0% intro APR: Citi Simplicity Card – No Late Fees Ever

Citi Simplicity® CardWant a year and a half of no interest? If so, the Citi Simplicity Card – No Late Fees Ever is your best bet. This card offers a generous 18-month 0% intro APR on purchases and balance transfers (with a 5% balance transfer fee, $5 minimum), making it a great choice to pay your taxes. Although you will have to pay the IRS’ credit card processing fee, as detailed above, which starts at 1.87%, you will escape the IRS’ 4% interest rate, which means you’ll come out money ahead — assuming you pay the balance off before the 0% intro APR runs out. Other perks of the Citi Simplicity Card Card include no annual fee, no late fees, no penalty APR and free access to your Equifax FICO score.

Long 0% intro APR and cash back rewards: Chase Freedom Unlimited

Chase Freedom Unlimited®Those looking to earn cash back on their IRS bill and get a long 0% intro APR will be pleased with Chase Freedom Unlimited. This card has a 15-month 0% intro APR on purchases and balance transfers (with a 5% balance transfer fee) and earns an unlimited 1.5% cash back on all purchases, which means you’re getting cash back to pay your IRS bill! While these rewards are not enough to offset the IRS’ credit card processing fee, the $150 bonus you earn when you spend $500 on purchases in the first 3 months may make it worthwhile. Rounding out Chase Freedom Unlimited is no annual fee.

Best credit cards for earning rewards

If you plan to pay your tax bill in full, it may still be worth it to pay with a rewards credit card. That’s because if you opt for a card that earn 2% or more on every purchase, you can balance out the IRS’ credit card processing fee and get some extra rewards. It should be noted that the cards detailed below do not offer 0% intro APRs on purchases, which means you’ll want to pay these cards off after you make the IRS payment because if you don’t, you’ll be charged interest.

Cash back rewards: Citi Double Cash Card – 18 month BT offer

Citi® Double Cash CardThe Citi Double Cash Card – 18 month BT offer (a NextAdvisor advertiser) has a unique way of earning cash back. You’ll earn 1% when you make a purchase, then earn an additional 1% when you pay for the purchase. Although this card has no 0% intro APR on purchases, it does have an 18-month 0% intro APR on balance transfers (with a 3% balance transfer fee). The Citi Double Cash Card – 18 month BT offer also provides you with a free monthly Equifax FICO credit score and has no annual fee.

Check out our credit card reviews to learn more about the cards detailed in this post and apply online, and follow our tax preparation blog to get the latest information on tax identity theft, e-filing and more.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.