Originally published April 7 2005
Paying taxes with plastic has some benefits, some downfalls
by Mike Adams, the Health Ranger, NaturalNews Editor
More than 950,000 people used their credit cards to pay their taxes last year, a 70 percent rise from the previous year. This is still a small percent of the total number of taxpayers, due to the fact that a "convenience fee" of 2.49 percent of the balance is charged. Although the IRS is banned from paying this convenience fee, they have partnered with some companies to create incentives, including United Mileage Plus Visa, American Express, and Discover, which all have deals that make paying the IRS with plastic easier, even if it remains a less attractive option.
You need to do the math to see that you don't overpay.
You use plastic to pay for your dry cleaning, movie tickets and your kids' Happy Meals.
More than 950,000 taxpayers used plastic to pay the IRS last year, up 70 percent from a year earlier.
One big reason: Charging your taxes is expensive.
Taxpayers who use credit, debit or charge cards must pay a "convenience fee" equal to 2.49 percent of the balance.
Ordinarily, when you use a credit card to buy a product or service, the merchant picks up this fee, but federal law bars the IRS from paying it.
Recently, though, credit and debit card issuers have trotted out a raft of incentives designed to encourage more people to pay their taxes with credit, charge or debit cards.
� Extra miles: United Mileage Plus Visa card holders can earn two frequent-flier miles for every dollar spent when they use their cards to pay their federal income or property taxes -- double the normal number of miles for card purchases.
American Express Delta SkyMiles also offers double miles to cardholders who use their card to pay federal income taxes.
� Points for fees: This year, for the first time, American Express cardholders can use their membership rewards points to pay the convenience fee.
The H&R Block offer is limited to customers who purchase H&R Block's online tax-preparation program through Discover's Web site, www.discovercard.com/taxcenter.
The TurboTax offer is available to anyone who e-files using TurboTax online or desktop software and pays with a Discover card.
For the first quarter of 2005, the rate is 5 percent; in the second quarter, it will go up to 6 percent, says Brenda Schafer, tax analyst for H&R Block.
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