09 / 08 / 11

Myth? Is Owning Credit Card Debt Better Than Owing The Irs

Answer: Maybe.

Did you know that the IRS accepts Visa, Mastercard & American Express? With credit cards, according to the IRS website "you can pay current and past due Form 1040 balances along with current year Form 940 balances and current quarter plus the three prior quarters Form 941 balances." The downside is, some credit cards charge interest rates of 20% or more, and it's "revolving door" credit...so if you only pay the minimum payment due, it often takes years, even decades to pay off the debt. So is paying off an IRS debt with a credit card essentially "robbing Peter to pay Paul"? Perhaps. But remember, if you don't pay the IRS, they have much more far-reaching powers than credit card companies do to get your money. The IRS can seize your bank account, your 401k, garnish your wages and place a lien on your property—all things credit card companies cannot do.