Primer on Paying Taxes With a Credit Card

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czaj
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Re: Primer on Paying Taxes With a Credit Card

Post by czaj »

tananaev wrote: Thu Mar 18, 2021 1:42 pm I'm planning to try Jiko this year:

https://jiko.io/

It's a debit card that gives 1% cashback on IRS payments. Because it's a debit card, there's only a fixed fee, so essentially you get the whole 1% back on a large amount.
Interesting. Their reward terms specify “irs.gov”. Does that mean through a payment processor? Or am I missing an option to use a debit card directly with the IRS?
Payments made with your Jiko Virtual Debit Card for Tax Payments, which only include federal personal tax payments via https://www.irs.gov. This would include transactions posted and cleared during the previous statement cycle.
BH13
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Re: Primer on Paying Taxes With a Credit Card

Post by BH13 »

czaj wrote: Thu Mar 18, 2021 1:52 pm Interesting. Their reward terms specify “irs.gov”. Does that mean through a payment processor? Or am I missing an option to use a debit card directly with the IRS?
Directly with the IRS @ https://www.irs.gov/payments
ZinCO
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Re: Primer on Paying Taxes With a Credit Card

Post by ZinCO »

BH13 wrote: Thu Mar 18, 2021 2:11 pm
czaj wrote: Thu Mar 18, 2021 1:52 pm Interesting. Their reward terms specify “irs.gov”. Does that mean through a payment processor? Or am I missing an option to use a debit card directly with the IRS?
Directly with the IRS @ https://www.irs.gov/payments
The IRS outsources CC payments to the 3 processors discussed above, so I'm not clear on what irs.gov means in this context.
calwatch
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Re: Primer on Paying Taxes With a Credit Card

Post by calwatch »

soxpatsbos wrote: Thu Mar 18, 2021 1:15 pm So what's the best cashback card to pay ~50k in taxes? I see the minimum fees charged by processors have gone up from 1.88 to 1.96%. Assuming 2% cashback, is it better to look for some other offer? Pointers, tips greatly appreciated.
It probably should be a multiple of sign up bonuses that require high spending. Notably, unlike most other "manufactured spending", AMEX allows for tax payments to count toward a sign up bonus. Then, a standard 2% card (if you don't qualify for the BoA 2.625% Travel Rewards card).
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

calwatch wrote: Thu Mar 18, 2021 5:26 pm Notably, unlike most other "manufactured spending", AMEX allows for tax payments to count toward a sign up bonus.
NB: Income tax payments are not manufactured spending. They are real spending. Amex also pays rewards on property tax payments and sales taxes associated with purchases.
Kookaburra
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Credit Card with Highest Cashback % (Paying Taxes)

Post by Kookaburra »

[Thread merged into here --admin LadyGeek]

I am interested in using a credit card to make quarterly tax payments. I understand there is a fee to do so, but it can still make sense if the CC cashback % exceeds the fee %.

What CCs offer the highest cashback % for use in paying taxes?

Thank you
tananaev
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by tananaev »

If you have preferred rewards status with BofA, you can get 2.6% cashback on Travel Rewards card. Net ~0.6% cashback after fees.

Better option is to pay with debit card. For example, I paid with Jiko debit card and got 1% on a fairly large amount (minus ~$2 fixed fee).

Another option is to get signup bonus on a new credit card.
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JoMoney
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by JoMoney »

Alliant Credit Union has a 2.5% cash back card , but has a $99 annual fee.

2% seems to be the top for the no annual fee cards... which is only just barely higher than the cheapest tax payment processor.
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William Million
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by William Million »

If you travel, one of the cards that rewards points for airline tickets or hotel stays might compensate more, especially some of the currently large sign-up bonuses.
calwatch
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by calwatch »

I would agree that taxes are a great idea for sign up bonuses, particularly American Express with their large bonuses and suspicions about other forms of gaming such as large grocery store gift card purchases.
cowbman
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by cowbman »

As above. Sign Up bonuses or 2%+ cards, but I always pay with cash back debit cards since it's a flat fee and not a %, so it's always better than the 2%+ credit card.
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Darth Vanguard
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Re: Credit Card with Highest Cashback % (Paying Taxes)

Post by Darth Vanguard »

JoMoney wrote: Mon May 17, 2021 11:19 pm Alliant Credit Union has a 2.5% cash back card , but has a $99 annual fee.
In the past, I used the Alliant credit card for taxes. About two years ago, they capped the 2.5% cash back on the first $10,000 spent per statement cycle. I continue to use this card for personal spending, so between that and the 10k cap, I don't have enough wiggle room left to cover the taxes. I used to get good offers from the Capital One Spark card in the mail ( $1,500 - $2,500 cash bonus), but those disappeared when COVID hit. If I get another one of those offers, I will use that. For now I just use EFTPS.
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LadyGeek
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Re: Primer on Paying Taxes With a Credit Card

Post by LadyGeek »

I merged Kookaburra's thread into a similar discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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rich126
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Re: Primer on Paying Taxes With a Credit Card

Post by rich126 »

I had a huge tax bill this year and put part of it (10%) on a card to get the sign up bonus. It didn't make sense with the nearly 2% fee to use a credit card to put the rest on a card. I could have signed up for more cards but I got plenty and currently more points than I can use. And while getting maybe 1.5 points on a chase card probably exceeds the 2% fee (since they can be redeemed for 1.5 cents or more and 1.5 * 1.5 > 2) it wasn't enough for me to do it. (didn't really want to pay now for more points that I won't use for a few years and their likely devaluation).

The remainder I just used a bank account transfer.
ZinCO
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Re: Primer on Paying Taxes With a Credit Card

Post by ZinCO »

rich126 wrote: Tue May 18, 2021 2:44 pm I had a huge tax bill this year and put part of it (10%) on a card to get the sign up bonus. It didn't make sense with the nearly 2% fee to use a credit card to put the rest on a card. I could have signed up for more cards but I got plenty and currently more points than I can use. And while getting maybe 1.5 points on a chase card probably exceeds the 2% fee (since they can be redeemed for 1.5 cents or more and 1.5 * 1.5 > 2) it wasn't enough for me to do it. (didn't really want to pay now for more points that I won't use for a few years and their likely devaluation).

The remainder I just used a bank account transfer.
That's really the way to look at it... Use online taxes for meeting sign-up bonuses as needed, or for getting cash back in excess of the 1.9% fees. Stockpiling a bunch of points at a cost >0 is a dangerous game due to the constant threat of devaluation.
MisterBill
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Re: Primer on Paying Taxes With a Credit Card

Post by MisterBill »

Another option if you have the AMEX Blue Cash Preferred (BCP) card is to buy $500 Visa/MC gift cards at a supermarket, since you get 6% back on those purchases. Stop & Shop and Giant supermarkets have a deal through Thursay where you get 3x points on Mastercard purchases, which means $15 back on grocery or up to $30 if used for gas and you buy 20 gallons. Bonus is that you'll pay the reduced debit card fee when you use them to pay your taxes. Sadly, only two of the three services accepted the MC as a debit card.

I recently got a new BCP card for my wife since I had maxed out the $6k in grocery purchases for the year. There was no annual fee the first year and I got a referral bonus and she got a sign-up bonus when she spends $3k in the first six months.
bogcir
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Re: Primer on Paying Taxes With a Credit Card

Post by bogcir »

Just throwing this out there, as I just saw this.

https://blog.coinbase.com/coinbase-card ... 08e72cd0b5

Coinbase offers a 4% back VISA Debit Card, though 4% is paid back in crypto (Stellar Lumens). I imagine if you immediately convert to USD, it shouldn't be a big holding risk. The card hasn't fully launched yet, so there may be more of a catch, but it seems potentially lucrative since the debit card fee for paying taxes is small.

Anyone considering this?

edit: Found more details.

https://help.coinbase.com/en/coinbase/t ... e-card-faq
Currently, the daily spending limit is £10,000 / 10.000 €. Feel free to contact cardsupport@coinbase.com if you would like to change your daily spending limit. Additionally, there’s a monthly purchase limit of £20,000 / 20.000 € and a yearly purchase limit of £100,000 / 100.000 €.
So, perhaps not enough to be really worth using, but something to keep an eye on.
Last edited by bogcir on Tue Jun 01, 2021 10:32 am, edited 2 times in total.
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LadyGeek
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Re: Primer on Paying Taxes With a Credit Card

Post by LadyGeek »

^^^ A quick reminder to see the site owner's post: New Forum Policy Prohibiting Discussions of Cryptocurrency, Market Manipulation Schemes, etc as Investing Strategies
Alex Frakt wrote: Wed May 19, 2021 1:46 am Note - This policy is limited to discussions of investing strategies. Discussions of cryptocurrencies in other contexts is still acceptable, for example for money transfers or microtransactions or the current thread on crypto trades and tax loss harvesting.
Discussion in the context of credit cards is fine.
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