CREDIT LIMIT

Charging a big tax bill on your card could put you within spitting distance of your credit limit, making it easy to max out the account and incur penalties. Your credit could also suffer.

“I’d look at ‘What is my financial situation?’” says Cari Weston , director of tax practice and ethics for the American Institute of Certified Public Accountants. “If I need to have my credit card available for emergencies to pay for expenses, because I might not have a rainy-day fund set aside, (I’m) better off not adding that credit card debt.”

The exception: If your card has a limit well in excess of your tax bill, charging it might not hamper your purchasing power or hurt your credit much. installment arrangement with the IRS likely is your best option. Here’s what to do:

—Calculate how much time you will need. If you can pay in full within 120 days, you won’t incur a setup fee .

— Go online. An online installment agreement with direct debit is the cheapest option, with a setup fee of $31. If you set it up offline without automatic payments, it costs $225 . (For state taxes, you’ll have to set up a separate payment plan with your state, which may have different rates.)

—Choose a long repayment period. To avoid falling behind on payments, Weston recommends taking the longest repayment period the IRS offers. “Commit to what you know you can pay,” she says. “You can always pay more.” Then the faster you pay it down, the more you’ll save on interest and penalties.