Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

Paying Taxes with Credit Cards May Not Be the Best Move

It has become easier than ever to pay with credit. Even some of the local bell ringers are saying, “Is this Visa or Mastercard?” So, the IRS has made it easy for you too—but, before you put your taxes on your credit card, you may want to think about where you are headed.

Some think that when they are in debt they know they can no longer handle that they have nothing to lose. These same folks end up putting bills they normally would’ve tried to pay on their credit card in hopes that a Chapter 7 bankruptcy will wipe out their credit card debt. While a Chapter 7 does eliminate your debt, you shouldn’t purposefully put expenses on your credit card because you think you’ll never have to pay it back. In fact, it may be considered fraud. It is actually the same as transferring a balance right before filing and will be pursued as a fraudulent transaction by a credit card company.

It isn’t different when it comes to taxes. If you put your taxes on your credit card, you can only eliminate that credit card debt if the taxes would have been eliminated any way. In other words, putting your taxes on your credit card won’t give you a better chance at having them eliminated. Plus, your credit card company can still come after you for the taxes you put on your card if it is not eliminated in a Chapter 7. There are very specific rules on when back taxes can be eliminated and these rules don’t change because you put it on a credit card.

An experienced bankruptcy attorney will help you navigate through problems like this—and others—that could be hard to handle. These situations are easily avoidable if you have an attorney who understands the stress you are under and exactly how bankruptcy can help you relieve it.