YOU’LL PAY PROCESSING FEES

When you buy something with a credit card, the merchant pays processing fees to the financial institutions that handle the transaction. But when you put a tax payment on a credit card, the IRS doesn’t pay those processing fees. You do.

To pay federal taxes with a credit card, you have to use one of the IRS’ third-party credit card processors, which charge fees of 1.87 percent to 2 percent of the amount you put on the card. If you use software such as TurboTax to file returns and pay taxes online, the fees may be higher.

These fees could eat up your credit card rewards. Most cards offer only a 1 percent to 1.5 percent rewards rate for this type of transaction.

The exception: If you put your tax payment on a card with a 2 percent rewards rate or higher and then pay it off in full on your next statement, your rewards might exceed the fees — but just by a hair . 18th due date, then you can set up an installment agreement with the IRS to pay the remaining balance.”

For 2017, it costs $31 for qualified taxpayers to set up an installment agreement online and pay via direct debit from a checking account, according to the IRS website. That’s in addition to 4 percent annual interest on unpaid federal taxes and a penalty of 0.25 percent of the outstanding balance for each month the agreement is in effect. That works out to an annual percentage rate of about 7 percent in interest .

It’s a much better deal than 13.61 percent , the average APR for all U.S. credit card accounts that were assessed interest in the last quarter of 2016, according to the Federal Reserve.

The exception: Paying with a 0% APR credit card could be more cost-effective than setting up an installment agreement, if you can pay off your balance before the promotional period ends.