IRS reminds consumers of potential tax deduction

04.11.09
By Lewis Green

Did your credit card company charge you a fee to pay federal individual income taxes electronically? If they did and if you are a taxpayer that itemizes deductions, you may be eligible for a tax credit.

According the IRS, fees charged by card processors to individuals using a credit or debit card to pay taxes are typically about 2.5 percent of the total tax payment. The agency says that for some eligible tax filers, an expense over 2 percent of their adjusted gross income can be deducted.

Do you qualify for this tax credit? Maybe, says the IRS, but not all individuals that pay the fee can claim a deduction.

Individual filers who have completed a Form 1040 Schedule A to itemize expenses and those who have enough miscellaneous expenses - like tax preparation costs or job search expenses - to exceed the 2 percent threshold likely qualify.

But to avoid being charged a fee in the future, the IRS says that consumers can pay by check or have funds owed automatically withdrawn from their bank accounts.

Earlier this week the IRS issued another important reminder - don't forget to meet the April 15 tax filing deadline. If you can't meet the deadline for filing taxes, request an extension by the same date to avoid a failure-to-file penalty, says the IRS.

And for some consumers who think that an extension of time to file request means you have additional time to pay, the government agency is offering words of clarification.

"An extension of time to file is not an extension of time to pay. Taxpayers who can't pay the full amount would still benefit from filing their return and paying as much as they can by April 15," noted the tax collection agency.

More Personal Finance Articles | News Home | Discuss in our Forum

A credit card fee for paying taxes may be deductible