Paying taxes with a credit card is one method for increasing your spending on a rewards credit card. In this video, we’ll talk about how that works, costs, and more.
How to pay taxes by credit card
You can read about paying taxes with a credit card here
(00:13) – Find our podcast episode 343 “How we increase spend to earn big card bonuses” here
(00:40) – Two payment processors
(02:26) – Basics of making tax payments
(02:38) – Pay estimated taxes vs end of year taxes
(04:03) – How to see the % fee you’ll be charged
(06:47) – ACI PayPal trick
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How can you earn points for tax payments on the BILT rewards MasterCard?
To Greg (and others)-On Ep. 343, you mention that having high taxes as a business owner, you utilize this as an opportunity to earn lots of points/miles. I don’t believe these processing/service fees are tax deductible (as an expense), so the question is how you justify this additional ‘out of pocket’ expense that you are paying for vs. avoiding it (entirely) when paying by check? Is it just based on the additional rewards you are earning for it? Using a $10,000 payment amount as an example, you are paying $175 in OOP fees. Yes, you earn a little something on that extra 175 via credit card spend (on top of the 10K), but if you have a much larger federal tax bill, that will be a higher amount. So, trying to justify when that makes sense beyond the opening of a new card/account where you need to meet a spending minimum for a bonus.
The only thing I can identify having a need, for example, is with an airline like United that $$ spend earns PQP towards elite status: with the airline it’s $1 ticket cost = 1 PQP or with the CC it’s $20 = 1 PQP. So, a $10,000 spend for taxes earns 500 PQP (and not including the 9 PQP earned on the 175 fee). It’s a way to earn PQP…but it’s still a potentially large price to pay (literally and figuratively) when that 1.75% could be avoided. Just trying to understand and rationalize the cost/benefit analyses. Thanks.
Any maximum $ amount that can be charged (per each transaction) on either of the 2 providers, for those of us with a high tax payment?
Question on meeting spend requirements. For this particular year I’m due for a tax refund so needless to say I don’t ‘need’ to make a tax payment.
But- could I make a ‘tax payment’ and then how long would it take for the IRS to ‘pay me back’ my overpayment?
I should be getting my regular tax refund + my overpayment. Will they be direct deposited together? Is there much of a delay in getting my overpayment back?
Reason I’m asking is because I want to figure out the amount of money I can float doing this.
Awesome video btw! Didn’t know about the premium credit cards that would be charged the extra fees and how the different payment processors consider them to be different maybe.
Assuming you make the overpayment and then file, it should come through in ~3 weeks and they follow the specific instructions you provide on how much to send to each bank account. But a word of warning, last year I got hit with an identity verification request, and I know several others were as well this delayed my refund by about 8 weeks on top of the normal 3. Don’t overpay more than you can afford to float.
Thanks for your response! That is very helpful information and exactly what I needed to know.
But, not the Bilt card.