IRS Accepts PayPal - Here's What You Need to Know

First off, yes, you can pay the IRS with a credit card. However, most credit cards cap out at 2% for this kind of transaction. What most people might not know is that IRS also accepts PayPal. The IRS's acceptance of PayPal as a payment method also opens up a new opportunity for PayPal Mastercard holders to earn cashback rewards. The PayPal Extras Mastercard offers 3% cash back on eligible purchases, including payments made to the IRS.

Here's how you can take advantage of this offer:

1. Sign up for the PayPal Extras Mastercard: If you don't already have the PayPal Extras Mastercard, you can apply for it on the PayPal website. This card offers 3% cash back on eligible purchases, including payments to the IRS.
2. Link your PayPal account: Once you have the PayPal Extras Mastercard, you'll need to link it to your PayPal account. This will allow you to use your card to make payments to the IRS and earn cash back rewards.
3. Make your IRS payment: When it's time to make your tax payment to the IRS, simply use your PayPal Extras Mastercard to pay your tax bill. You'll earn 3% cash back on the amount you spend, which can add up to significant savings over time.
4. Redeem your rewards: Once you've earned cash back rewards on your PayPal Extras Mastercard, you can redeem them for statement credits, gift cards, merchandise, or even cash.

It's important to note that not all IRS payments are eligible for cash back rewards. For example, you may not earn rewards on payments made for penalties or interest charges. However, most tax payments, including tax bills and estimated tax payments, should be eligible for cash back rewards.

Overall, using the PayPal Extras Mastercard to pay your taxes is a great way to earn cash back rewards on an expense that you can't avoid. With 3% cash back on payments to the IRS, you can offset the credit card processing fee (up to 1.98%) and turn a necessary expense into an opportunity to earn rewards and save money.