Posts Tagged ‘Tax Payments’

Planning Tax Payments

Wednesday, April 6th, 2016
It Doesn't Add Up

It Doesn’t Add Up

As April 15 approaches (well, for 2016, April 18 is the relevant date), many people will pay their federal taxes with their credit cards in order to accumulate the points for frequent flyer awards. But did you know that the IRS charges the merchant credit card fees back to the taxpayer? An accountant quoted in the morning news presented a convincing argument that in most cases, the cost of the payment fees exceeds the value of the rewards points. Of course, if you need to conserve your cash, paying the taxes on your credit card may be your only option. But if you can send in a check, it might be less expensive. I was not aware that the charge-back was the practice of the IRS, so I thought I’d pass this on.

And speaking of charges incurred without your knowledge, you might consider the tradeoff with automating your utility payments by storing your credit card information online. The benefit of that practice, of course, is that you don’t have to think about making your monthly payments and you can easily record your expenses with your credit card or bank statement. The disadvantage, and one I had not previously considered, is that your account may be charged without your consent. I happened to meet a lady who lost her condominium in a fire. As her cable television and Internet provider had her credit card information for billing purposes, they billed her for the month of service following the fire, even though she clearly did not benefit from that service as her home and its contents had been┬ácompletely destroyed. Contesting the charge (and she had called the cable immediately after the fire to suspend her service) is a hassle she did not need right after losing her home. So consider the risks associated with automated payments.