The last year has seen one of the worst economic scenarios we've experienced in a very long time.
Some would say it is been so bad that we are even in a second Great Depression of sorts.
What is indisputable is that money has been tight for most Americans.
It's particularly problematic now that taxes are coming due on April 15.
There are actually a number of different ways to pay your taxes to the IRS.
One way, which is rather ironic, is to pay through your credit card or debit card.
Given the credit crunch, this may seem like a very dubious approach, but it actually works fairly well.
There is, however, a catch.
When we are talking about taxes, there is always going to be catch! Whenever you pay for something with a credit card, the credit card company charges the vendor a transaction fee.
As you can imagine, the IRS has a rather bad attitude about being charged a fee.
As a result, any tax payment that you make with a credit card or debit card is going to result in the fee being charged to you instead of the IRS.
The amount of the fee is roughly 2.
5% depending on the type of card you have and the agreement that you have with your creditors.
If you owe a lot of money, the transaction fee could end up costing you quite a bit of money.
If you don't owe much money, you probably really don't care about it.
Regardless of which position you are in, there is a bit of good news regarding the transaction fee -- you can deduct it! The IRS has determined that the fees associated with the payment of federal tax, including payment of your estimated taxes, can be included as a miscellaneous itemized deduction.
You should take special note of the words "miscellaneous itemized deduction.
" These words have particular importance.
They simply mean that you can only deduct the fees that you are charged by your credit card company if you go ahead and actually itemize the directions on your tax return.
The practical way to know whether you do this is to simply consider whether you file a Schedule A.
If you file a Schedule A.
, then you are itemizing deductions and you can claim the fees as a deductible item.
There is, of course, one last catch.
The total of your itemized productions must exceed 2% of the taxpayer's adjusted gross income.
If the total was not reached this threshold, then unfortunately you cannot deduct the charges from your credit card for paying your taxes to the IRS.
Such is life.
Still, every deduction helps so at least you have that.
Some would say it is been so bad that we are even in a second Great Depression of sorts.
What is indisputable is that money has been tight for most Americans.
It's particularly problematic now that taxes are coming due on April 15.
There are actually a number of different ways to pay your taxes to the IRS.
One way, which is rather ironic, is to pay through your credit card or debit card.
Given the credit crunch, this may seem like a very dubious approach, but it actually works fairly well.
There is, however, a catch.
When we are talking about taxes, there is always going to be catch! Whenever you pay for something with a credit card, the credit card company charges the vendor a transaction fee.
As you can imagine, the IRS has a rather bad attitude about being charged a fee.
As a result, any tax payment that you make with a credit card or debit card is going to result in the fee being charged to you instead of the IRS.
The amount of the fee is roughly 2.
5% depending on the type of card you have and the agreement that you have with your creditors.
If you owe a lot of money, the transaction fee could end up costing you quite a bit of money.
If you don't owe much money, you probably really don't care about it.
Regardless of which position you are in, there is a bit of good news regarding the transaction fee -- you can deduct it! The IRS has determined that the fees associated with the payment of federal tax, including payment of your estimated taxes, can be included as a miscellaneous itemized deduction.
You should take special note of the words "miscellaneous itemized deduction.
" These words have particular importance.
They simply mean that you can only deduct the fees that you are charged by your credit card company if you go ahead and actually itemize the directions on your tax return.
The practical way to know whether you do this is to simply consider whether you file a Schedule A.
If you file a Schedule A.
, then you are itemizing deductions and you can claim the fees as a deductible item.
There is, of course, one last catch.
The total of your itemized productions must exceed 2% of the taxpayer's adjusted gross income.
If the total was not reached this threshold, then unfortunately you cannot deduct the charges from your credit card for paying your taxes to the IRS.
Such is life.
Still, every deduction helps so at least you have that.