What are your thoughts and issues of paying IRS with credit cards

Archived From: Deal Discussion
  • Page :
  • 1
  • Text Only
rated:

Member Summary
Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

It works well, much faster than paying by mail, and if you have a credit card with good cashback or rewards, you can make a small return on it.

novocane said:   It works well, much faster than paying by mail, and if you have a credit card with good cashback or rewards, you can make a small return on it.
  Doesn't the processing fee negate the cashback/rewards?

kshell said:   
novocane said:   It works well, much faster than paying by mail, and if you have a credit card with good cashback or rewards, you can make a small return on it.
  Doesn't the processing fee negate the cashback/rewards?

  Citi Doublecash is 2%. Pay1040.com  is 1.87% for example. So depends on what card you use.  For Chase Ultimate Rewards, some people value those at 2.1 cents each.  

Found this
https://thepointsguy.com/2015/02/paying-taxes-with-a-credit-card...
But saw an article the other day that showed some examples. Now I can't find it.

So: example
$10,000 x .02 = $200 bonus points
$10,000 x .0187 = $187 cost
Make $13
Is there any other slant other than meeting spending thresholds?

I have done this multiple times to meet spending bonus thresholds. thats the only time I feel its worth it. unless you have a 5% cashback card somewhere.

Processing fee is tax deductible for some: https://www.irs.gov/uac/credit-and-debit-card-fees-related-to-tax-payment-are-deductible I assume the 2016 fee would be deductible in 2017 if it was incurred in 2017.

tightpapa said:   So: example
$10,000 x .02 = $200 bonus points
$10,000 x .0187 = $187 cost
Make $13
Is there any other slant other than meeting spending thresholds?

  
Amex business platinum earn 1.5x MR on purchases >$5000. MR are worth >2c/MR for airline purchases, so it's a >3% return, so the return is up to 1.25%. There can be some other cases.

PRO TIP: dont pay any pesky taxes; 100% cash back!

A few other options:

* Chase Freedom Unlimited - 1.5 UR per $
* Alliant - 3%
* Discover It Miles - 1.5% doubled to 3% the first year
* Club Carlson Premier Rewards and Business Rewards - 5x points (although depends on how you value their points)
* SPG Amex - their points tend to be valued at better than 1.87, especially now that they transfer to Marriott at 1:3


Figuring income tax
Disclaimer
Doctor of credit article
A Complete Guide To Paying Your Federal Taxes With A Credit Card, Updated For 2017
http://www.doctorofcredit.com/a-complete-guide-to-paying-your-taxes-with-a-credit-card/ 

Some Elan Financial managed cards like Fidelity Investments Visa 2% Cashback Rewards all spending are making targeted email offers. YMMV. I was offered an extra 1% cashback after $600 spending (which I was going to do anyway).

Instead of using a credit card, I can purchase $500 debit cards on some credit cards like Discover and Chase Freedom drawing 5% cashback.  Doing so, the tax payments with a debit card is a smaller fee.  I did this on all my 2016 estimated income tax payments.  There are articles out there about doing split 2017 tax payments.
~~Thankfully, you can call Official Payments Corporation at 800-487-4567 and pay with as many debit cards as you want. Their debit card fee is now $3.50, so the easiest way to pay with a $500 debit card is to request a payment of $496.50, which will equal $500 after the fee is included. In my experience, the operators are friendly and efficient, and you’ll get email confirmations immediately as payments are processed.
https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card


The FW Finance forum has a few discussions on the same topic.

Paying taxes online with credit cards through payusatax.com
https://www.fatwallet.com/forums/finance/1550987 
Paying IRS estimated taxes with a credit card question
https://www.fatwallet.com/forums/finance/1545704 

bobley said:   Processing fee is tax deductible for some: https://www.irs.gov/uac/credit-and-debit-card-fees-related-to-tax-payment-are-deductible I assume the 2016 fee would be deductible in 2017 if it was incurred in 2017.
  Your card statement will list this payment as "United States Treasury Tax Payment." The convenience fee paid to your provider will be listed as "Tax Payment Convenience Fee" or something similar. ◦The fee is deductible for personal tax types as a miscellaneous itemized deduction. However, only those miscellaneous expenses that exceed 2 percent of the adjusted gross income can be deducted.
For more information, refer to Publication 529, Miscellaneous Deductions.
◦For business tax types, the fee is a deductible business expense.•If you overpaid, IRS will refund it after the return is processed, excepting offsets or debt on your account.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017