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When it makes sense to pay your taxes with a credit card – and when it doesn’t

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  • You can pay taxes with a credit card through third-party providers – not through the IRS website.
  • If you cannot pay off your credit-card balance immediately, you are better off setting up a payment plan with the IRS than using your credit card to pay your taxes.
  • Paying taxes with a credit card to earn a big sign-up bonus or reward points makes sense if the value exceeds the credit-card fee you will be charged.

You can pay your taxes with a credit card, but that doesn’t mean it’s always a good idea. The IRS allows you to pay with a credit card through third-party partners or when you e-file your taxes through online tax services like TurboTax or H&R Block.

Paying taxes with a credit card isn’t free, but sometimes it could make sense. Here’s how to figure out what’s best for you.

What taxes you can pay with a credit card

You can pay your annual tax return, due when you file your taxes sometime between the beginning of the year and April 15. You can also use a credit card to pay quarterly estimated tax payments, which are most common for people who are self-employed or who have freelance income. Some states, cities, and counties allow you to pay income and property taxes with a credit card as well.

Read more: The IRS says the busiest day of tax season is right around the corner, and there’s a simple way to beat the rush

What it costs to pay your taxes with a credit card or debit card

The IRS works with three payment processors to handle tax payments made via debit or credit card. There are also options for paying your tax bill with a credit card when you e-file.

Debit card payments require a small flat fee, but you can just as easily pay your taxes with a bank account transfer for free. In most cases, that will be the better option. For paying your taxes with a credit card through a third-party processor, you’ll pay the following convenience fees:

If you pay your taxes with your credit card when you file online through tax software like TurboTax or H&R Block, the fees typically start at 2.49%, but could be even higher.

When not to pay taxes with a credit card

Deciding whether it makes sense to pay an extra fee when filing your taxes depends on your card’s rewards and your ability to pay it off before the next statement due date.

If you can’t pay off your balance in full every month, you should avoid paying your taxes with your credit card. With average credit-card-interest rates around 17%, it is better to set up a payment plan with the IRS than pay huge interest charges from your credit card (not to mention the convenience fee). Interest rates associated with an IRS payment plan will be around 5% or so.

When to pay taxes with a credit card

If you do pay your balance off in full every month, you could be a good candidate to pay your taxes with a credit card – but only if the rewards are bigger than the fee.

If you use the Citi Double Cash Card, for example, you’ll get the equivalent of 2% cash back. That’s more than the fee. If you use points from Chase Freedom Unlimited, at 1.5% cash back (or 1.5x points per dollar spent), as travel rewards paired up with a premium Chase Sapphire Preferred Card, it could also make sense – when you hold the Sapphire Preferred, you get a bonus when you redeem points for travel through Chase, and you can get a higher value by transferring points to airline frequent flyer partners. Consequently, the value of each point can be well over 2¢.

Alternatively, if you’re using your taxes to hit the minimum spend requirement on a credit card’s sign-up bonus, you might end up getting way more than 1.87% back.

But if you don’t get rewards or the value is less than 1.87%, you should only use a card if it will get you over the hurdle for a bonus. Otherwise, you will spend more than you get back in rewards!

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Ottawa announces new funding to combat online child abuse

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Ottawa has announced $22 million in funding to fight online child abuse.

Noting that police-reported incidents of child pornography in Canada increased by 288 per cent between 2010 and 2017, Public Safety Minister Ralph Goodale made the announcement Tuesday.

It follows a London meeting last week that focused on the exploitation of children between Goodale and his counterparts from the United States, Britain, Australia and New Zealand, collectively known as the Five Eyes intelligence group.

Major internet companies, including Facebook, Google and Microsoft, were also at the meeting and agreed to a set of rules the members of the group proposed to remove child pornography from the internet quicker.

On Tuesday, Goodale warned internet companies they had to be better, faster and more open when in comes to fighting child abuse on line.

In this Friday, Jan. 12, 2018 photo, detectives use the Cellebrite system to extract information from cellphones at the State Police facility in Hamilton Township, N.J. “Operation Safety Net,” the results of which were announced in December, netted 79 people suspected of exploiting children. (Thomas P. Costello/Asbury Park Press/Canadian Press)

“If human harm is done, if a child is terrorized for the rest of their life because of what happened to them on the internet, if there are other damages and costs, then maybe the platform that made that possible should bear the financial consequences,” Goodale said.

The government plan includes $2.1 million to intensify engagement with digital industry to develop new tools online and support effective operating principles, $4.9 million for research, public engagement, awareness and collaboration with non-governmental organizations and $15.25 million to internet child exploitation units in provincial and municipal police forces across the country.

Goodale said the strategy recognizes that technology is “increasingly facilitating the easy borderless access to vast volumes of abhorrent images.”

That, he said, makes investigations increasingly complex,

“This is a race where the course is always getting longer and more complicated and advancing into brand new areas that hadn’t been anticipated five years ago or a year ago or even a week ago,” Goodale said.

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Gas prices expected to dip in Ottawa

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If you can wait an extra day to fill up the gas tank, your bank account might thank you.

Roger McKnight of Enpro is predicting a five cent dip in gas prices Wednesday night at midnight.

This comes after a four cent drop this past Friday, just ahead of the August long weekend.

McKnight said the reason for the drop, both last week and this week, is due to comments made by US President Donald Trump. 

He says after the drop, the price will be, on average, 118.9 cents/litre in the Ottawa region.

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Oka asks Ottawa to freeze Mohawk land deal, send RCMP to Kanesatake

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The town of Oka is asking the federal and provincial governments to slap a moratorium on a proposed land grant to the local Mohawk community in Kanesatake and to establish an RCMP detachment on the First Nations territory to deal with illegal cannabis sales outlets.

The requests were contained in two resolutions adopted Tuesday night by the Oka town council.

The administration of Oka Mayor Pascal Quevillon held its first public meeting since the start of the controversy that pitted the town council against the Kanesatake band council over a decision by a local promoter to give local lands to the Mohawk community.

The three resolutions are addressed to Prime Minister Justin Trudeau’s government, Quebec Premier François Legault’s government and the Kanesatake band council led by Grand Chief Serge Otsi Simon.

As each resolution was read into the record, Quevillon stressed that the town of Oka was only looking to live in peaceful cohabitation with the Mohawk community.

The town also called upon Ottawa to establish a consultation process that would take into account the concerns of residents in Oka and  Kanesatake.

Quevillon’s administration also wants access to the plans detailing what lands are at the centre of negotiations between the federal government and the Mohawk community for purchase, suggesting the talks are simply a disguised form of expropriation.

“They’re giving money to (the Mohawks) to buy our land and annex it to their territory,” Quevillon said.

Despite its demands, the Oka council adopted an official statement addressed to the Kanesatake band council saying the town’s population wanted dialogue and peaceful cohabitation, with Quevillon citing the 300 years of close links between the two communities.

During the council meeting’s question period, some residents suggested that the council deal with other groups that say they are speaking for Kanesatake, including Mohawk traditionalists. Mayor Quevillon replied that the town would only deal with the band council and did so out of respect for Grand Chief Simon.

The mayor also argued that the RCMP, a federal police force, was best suited to be deployed in Kanesatake, where it would ensure the law would be respected, particularly on the issue of illegal cannabis shops.

Quevillon contended such a deployment was the only way for both communities to work together toward their mutual economic development.

Meanwhile, the apology Grand Chief Simon has said he is expecting from Quevillon for remarks he made earlier this summer about the Mohawk community in Kanesatake does not appear to be coming any time soon.

Asked by a resident if he would apologize, Quevillon left the answer to those citizens who attended the meeting, the vast majority of whom replied, “no.”

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