Survey: Tax Paying Statistics

Few Taxpayers Will Use Credit Cards to Pay Their Taxes

Although a number of third-party companies are now offering to let taxpayers settle their tax bills with credit cards instead of cash, a survey suggests that this is an idea whose time has not yet come.

Of those respondents who expect to owe additional taxes on their 2012 income (12.4%), only 21 people plan to pay with plastic

The downside of paying taxes with a credit card is the ‘convenience fee’, ranging from 1.88% to 2.35%, that the companies charge to process tax payments with a credit card. Still, many taxpayers who owe more than they expected might have little choice but to use their card and take their time paying back the taxman.

Almost 77% of the survey respondents who think they’ll owe money to the IRS plan to settle that bill with a single cash payment, even though 60.1% are aware of the installment options for tax payments and 52.1% realize they could pay with a credit card. Only 23.2% of those owing taxes plan to take advantage of any type of installment plan.

Do you plan to pay your entire tax bill in one payment?
Do you plan to pay your entire tax bill in one payment? © CreditDonkey

Of the poll’s “lucky” respondents (those expecting refunds), most already have plans for the anticipated windfalls:

56.1% plan to put the money away for a “rainy day.” Among the savers, 8% will set aside the money for retirement, 17.3% will put it toward a college fund, 24.6% will save for a big purchase, and 50.1% will put the money into an emergency fund.

If you'll save your tax refund, what will you save it for?
If you'll save your tax refund, what will you save it for? © CreditDonkey

Among those who plan to spend the refund, 13.7% will use it for a vacation, 8.5% for home improvements, 23.6% for a big purchase, and 54.2% for paying down their debt.

If you'll spend your tax refund, what will you spend it on?
If you'll spend your tax refund, what will you spend it on? © CreditDonkey

44.1% of those surveyed expect a refund of less than $500, 15.8% anticipate a refund of $500 to $999, 13.8% expect $1,000 to $1,999, and 13.9% plan to receive a check for more than $2,000.

How much do you expect to get from your tax return?
How much do you expect to get from your tax return? © CreditDonkey

If you do owe taxes, there are ways to cut your losses – and even come out a little ahead.

If you have a credit card that requires a high spending minimum to qualify for extra bonus points, a high tax bill could easily cover that amount. You could also pay with a new card that offers a 0% introductory APR for a set period. That way, in exchange for the convenience fee, you’ll receive some interest-free breathing room for a while.

From January 15 to January 22, 2013, CreditDonkey surveyed 1,109 people on the subject of personal income taxes.

Charles Tran is the founder of CreditDonkey, a credit card comparison and reviews website. Write to Charles Tran at Follow us on Twitter and Facebook for our latest posts.

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