While tax information isn’t generally reported to credit bureaus, late tax payments to the IRS could result in a tax lien, which could seriously damage your credit. But in general, that’s the only way tax-related information goes on your credit report.
What’s a Tax Lien?
It’s pretty simple: If you don’t pay your taxes, the IRS can file a notice of federal tax lien with the credit bureaus, and that’s a huge negative on your credit reports. If you owe more than $10,000, the IRS automatically files the lien after taxes have gone unpaid for 30 days (the threshold increased from $5,000 to $10,000 in 2011). At that point, you could see a possible 100-point slide in your Credit Scores.
Can I pay my taxes with a credit card?
If you decide to pay your taxes with a credit card or personal loan, there’s the potential you could see some negative impact on your scores. Adding to your debt load can affect your credit scores as it raises your credit utilization, and if you end up struggling to repay the loan, a poor payment history will have a similarly negative effect.
Disclaimer: Part of this article originally appeared on Credit.com
