Last year we paid our federal taxes by credit card. Is it worth paying your taxes with a credit card? My husband is self-employed, and we had a tax bill of about $30,000. I hate writing a check for taxes and getting nothing back. Taxes are hard enough to pay anyway, right? I decided I would try to get points for it last year. Let’s see if my efforts were worth it. Note: credit card offers were correct at the time of publishing this post but may have changed.
You can use two credit cards to pay your tax bill so I picked ones with a big minimum spend. We each opened the American Express Business Platinum Card.
The offer at the time was 110,000 Membership Rewards per person after a $15,000 minimum spend. I also referred him from mine and got an additional 35,000 Membership Rewards.
These have a high annual fee of $695, but I could offset $200 of each with airline travel incidentals and another $400 with Dell credits. The Dell credits are $200 every 6 months. That brought the annual fee to $95 and included Global Airport Lounge Access. I love a good airport lounge, and my hubby is now a convert to them too. It also comes with a $189 CLEAR credit.
I got 1.5x the points on my tax spending, so 45,000 points, 35,000 for the referral, and 220,000 for the welcome offers.
Total points earned: 300,000 Membership Rewards
The IRS details sites that you can use to pay your taxes with a credit card.
I chose PayUSATax and split my payment between both cards. My service fee was $294 for each payment, so $588 total.
I spent $588 on fees and received 300,000 in Membership Rewards. Most people value Membership Rewards at 2 cents apiece. I will use them for business class seats so that they will be worth more than that. But just at 2 cents apiece, my 300,000 Membership Rewards are worth $6,000. Definitely, worth those fees I had to pay!
Most business class seats are about 70,000 points/miles each way. I can easily get at least 4 seats with my points. These could each be valued at $4,000+, so definitely worth paying my taxes by credit card! I will be doing this every year!
I just paid my quarterly estimated taxes. My husband just opened a Chase Ink Business Cash, and the plan was to hit the whole minimum spend amount by paying that estimated tax. I went to do that last night, and I got an error message saying they couldn’t accept my card. I tried both payUSAtax and Pay1040 and got that error message. I didn’t try ACI. I did some research and found out this has been happening recently with the Ink cards.
Instead, I added the Ink card to my PayPal account and then used PayPal as my payment method and made sure my Ink card was the payment method for PayPal. I used Pay1040, and it worked perfectly.
We haven’t heard of any other cards having issues. Pam paid her taxes on an AMEX business card last night with no problem. If you run into any problems, use PayPal, and it should work great!
Paying taxes is NOT fun! If you can get a bonus in points/miles, it takes a little bit of the sting out of it. I will continue to get a new credit card to pay my income taxes in the future, as I found great value in it!
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