Pay taxes via credit card 2020 edition

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You might not like paying taxes, but paying taxes via credit card can be quite rewarding. The key is to earn credit card rewards that more than offset tax payment fees. For example, if you’ve signed up recently for a card that requires large spend to get a big welcome bonus, paying taxes via credit card can be the solution.

Here’s everything you need to know…

Pay taxes via credit card

What’s new?

  • June 27 2020: Visa gift cards weren’t working at Official Payments for a while, but as of June 27, 2020 (if not earlier), Visa gift cards have been working again.
  • July 1: Plastiq bill payment fees increase to 2.85%

Important due dates

  • January 15 2020: 4th quarter estimated taxes for 2019
  • July 15 2020:
    • Final 2019 taxes due (usually April 15)
    • 1st quarter 2020 estimated taxes (usually April 15)
    • 2nd quarter 2020 estimated taxes (usually June 15)
  • September 15: 3rd quarter 2020 estimated taxes
  • January 15 2021: 4th quarter 2020 estimated taxes

Pay taxes via credit card: Key Info

Here is key information you’ll need to know about paying taxes with credit or debit cards:

Credit card fee 1.87% to 1.99% (or 2.85%)

The IRS maintains a list of companies that accept credit and debit cards towards tax payments. You can find the current information by clicking here. Currently there are three separate payment processing companies on the list. At the time of this writing, debit card fees range from $2 to $3.95 per transaction and credit card fees range from 1.87% to 1.99%. Alternatively, you can pay taxes via the Plastiq Bill Pay service, but that will cost you more: 2.85% (as of July 1 2020).

Two payment limit per processor

The IRS maintains a table of frequency limits for paying taxes via credit or debit card (found here). In general, they say you can make up to two payments per tax period per type of tax payment. For example, you can make 2 payments every quarter to your quarterly estimated taxes, and you can make 2 payments every year to your annual taxes. Important: In my experience, these limits are enforced per payment processing company. That means that you can really make up to 6 payments per tax period per type of tax payment (or more if you make Plastiq bill payments as well). An IRS advisor I spoke with several years ago did not think that there would be any problem with making more than 2 payments by using different processors. Since then, I have made more than 2 payments per tax period many times and never had any issues. That is, of course, just my own personal experience. I can’t guarantee that your outcome would be the same.

No cash advance fees

I’m often asked whether credit card companies charge cash advance fees when paying taxes by credit card. The answer is no. All three official IRS payment processors agree (via their FAQ pages) that the payment is treated as a purchase not a cash advance. You can find FAQ info here, here, and here.

Unlimited payments via Plastiq

If you’re willing to incur slightly higher fees, you can make an unlimited number of tax payments via the Plastiq bill pay service. Plastiq usually charges 2.85%* to pay bills (including taxes) via credit card, but they occasionally offer lower fees via short term promotions. For details, please see: Plastiq Bill Payment Service.

* Plastiq charges 2.5% until July 1 2020.

To pay taxes via Plastiq, use Plastiq’s tax payment screen: plastiq.com/us-taxes.

Are tax payment fees deductible?

Fees are no longer deductible for personal taxes: Tax preparation fees used to be deductible when itemizing deductions for personal tax returns, but that is no longer the case.

Card processing fees are tax deductible for business taxes: This can substantially reduce your net cost of using payment services.

How to view tax payment history

Once you’ve made payments through online processors, Plastiq, or other means, you may want to see proof that the IRS received the amount you sent. You can view past payments by signing up here: irs.gov/payments/view-your-tax-account.

Reporting estimated payments

Estimated payments should be reported when filing your annual taxes. In my experience, if you make a mistake and forget to report some of these payments, the IRS will catch the error and refund the difference.

How to pay end of year taxes

Tell your tax preparer or tax software that you’ll pay via check. Then, browse to the appropriate tax payment site (e.g. Pay1040.com, OfficialPayments.com, PayUSAtax.com, or Plastiq.com/us-taxes) to pay your taxes. There is no need to mail in the 1040V payment voucher.

What happens if you over-pay your taxes?

Overpayments will be refunded: The IRS will refund any overpayment unless you owe a debt on your account.

Do you need to mail in payment vouchers?

No. No payment voucher required. You don’t need to send in a voucher if you pay by card.

Samsung Pay & Google Pay

Some tax payment websites support mobile wallet payments such as Samsung Pay or Google Pay. The US Bank Altitude Reserve card earns 3X for mobile wallet payments, so it should be a great match. However, readers have reported that Samsung / Android Pay (Google Pay) are only supported through Visa Checkout and that this does not trigger the Altitude’s 3X rewards.

Amex Express Checkout

Since Amex is strict about not counting manufactured spending towards new credit card welcome bonuses, tax payments are a great alternative. The nice thing about Amex Express Checkout is that you can use it to make payments even if you don’t have your card. If you recently signed up for a new Amex card and added it to your online account but haven’t yet received the physical card, you should still be able to pay through Amex Express Checkout.

Top 5 reasons to pay federal taxes with a credit card or gift card

1. Profit

A number of credit cards earn cash rewards greater than 1.87%. The best of the best are two cards that earn 3% cash back in your first year of card membership:

Since you’ll earn 3% cash back on both the base tax payment and the processing fees with the above cards, your profit should be approximately 1.186% of your tax payment.

Example:

  • $10,000 tax payment + 1.87% fee = $10,187
  • Cash back earned at 3% = $305.61
  • Profit = $305.61 – $187 = $118.61 (1.186% of $10K)

For more examples of cards that earn better than 2% rewards, see: Best Rewards for Everyday Spend.

2. Meet minimum spend requirements

If you recently signed up for new credit cards, chances are good that you have to spend thousands of dollars in order to earn the associated signup bonuses. Paying taxes is a cheap and easy way to accomplish that.

Here are some of the most valuable current welcome bonuses (click on a card for details; press “Next” to see more offers):

Card Offer
UBS Visa Infinite Business
Up to 100K points (call to apply)
50K after $10K spend in 3 months + 50K after paying 2nd year annual fee
(Offer Expires 7/31/2020)

No Annual Fee First Year, Then $550

AAdvantage® AviatorTM Business MasterCard®
Up to 75K miles
Up to 75K miles: 65k miles after $1K in purchases within 90 days and 10K miles when a purchase is made on an employee card that is added to the account at the time of application or within 30 days of the account open date

$95 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: Up to 75K miles: 65k miles after $1K in purchases within 90 days and 10K miles when a purchase is made on an employee card that is added to the account at the time of application or within 30 days of the account open date

CitiBusiness AAdvantage Platinum Select World MasterCard
70K miles
70K after $4K spend in first 4 months

No Annual Fee First Year, Then $99

UBS Visa Infinite
Up to 100K points (call to apply)
50K after $10K spend in 3 months + 50K after paying 2nd year annual fee
(Offer Expires 7/31/2020)

No Annual Fee First Year, Then $495

Chase IHG® Rewards Club Premier Credit Card
140K points
140K after $3K in the first 3 months

$89 Annual Fee

Recent better offer: None.

AAdvantage Aviator Red World Elite MasterCard
60K miles + Companion Certificate
60k miles + $99 Companion Certificate (+ taxes & fees) after 1st purchase within 90 days and payment of the $99 AF

$99 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Alternate offer: There is an in-flight offer for 60K after first purchase with the 1st year fee waived. See this link; code 999999 may work for the promo code.

Recent better offer: None. This is the best we've seen.

Chase British Airways Visa Signature® Card
Up to 100K bonus Avios
Get 50K Avios after $3K spend in first 3 months + 50K more Avios after $20K spend in first year

$95 Annual Fee

Chase Aer Lingus Visa Signature® Card
Up to 100K bonus Avios
Get 50K Avios after $3K spend in first 3 months + 50K more Avios after $20K spend in first year

$95 Annual Fee

Chase Iberia Visa Signature® Card
Up to 100K bonus Avios
Get 50K Avios after $3K spend in first 3 months + 50K more Avios after $20K spend in first year

$95 Annual Fee

Citi AAdvantage Platinum Select World Elite Mastercard
50K miles
50K miles after $2,500 spend in the first 3 months

No Annual Fee First Year, Then $99

Chase World of Hyatt Credit Card
Up to 50K points
50K points: 25,000 points after $3K spend in 3 months + 25,000 points after $6K total spend in 6 months

$95 Annual Fee

This card is believed to be subject to Chase's 5/24 rule.

Recent better offer: 60K: 40K after $3K in 3 months + 20K after $6K total in 6 months (Expired 1/9/19)

Wells Fargo Visa Signature Card
Up to 50K bonus points
5X rewards points on up to $12,500 in gas, grocery, and drugstore purchases for 6 months. (that's 1x normal earnings plus 4x bonus)

No Annual Fee

JetBlue Business Card
Up to 60K miles
Up to 60K: 50K after $1K spend in 90 days and earn 10K after a purchase is made on an employee card. Note that this offer may only show up on the mobile version of the site.

$99 Annual Fee

Lufthansa Miles & More® Premier World MasterCard® issued by Barclays
Up to 75K miles
Up to 75K miles: 50K after $3K spend in 90 days + 25K miles after $20K spend in first year

$89 Annual Fee

BOA Alaska Airlines Visa Signature
40K + $100
40K + $100 Statement Credit + $99 (+ taxes/fees) companion fare after $2K spend in 3 month

$75 Annual Fee

Chase United Explorer Card
40K Miles
40K miles after $2K spend in first 3 months

No Annual Fee First Year, Then $95

Recent better offer: 60K after $3K in first 3 months [Expired 4/30/20]

Capital One Spark Miles Business Credit Card
50K "miles"
One time bonus: 50,000 Capital One miles after $4.5K spend in 3 months

No Annual Fee First Year, Then $95

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: Earn up to 200K "miles": 50K after $5K spend in the first 3 months from account opening and an additional 150K after $50K spend in the first 6 months from account opening [Expired 1/27/20]

Chase Southwest Airlines Rapid Rewards® Plus Card
40K points
40K points after $1K spend in the first 3 months

$69 Annual Fee

This card is known to be subject to Chase's 5/24 rule.

Recent better offer: Up to 75K points: 40K points after $1K spend in the first 3 months plus 35K after $5K spend in 6 months [Expired 2/10/20]

Chase Southwest Airlines Rapid Rewards Priority Credit Card
40K points
40K points after $1K spend in the first 3 months

$149 Annual Fee

Be sure to choose the card you want after clicking through the link. This card is known to be subject to Chase's 5/24 rule.

Recent better offer: Up to 75K points: 40K points after $1K spend in the first 3 months plus 35K after $5K spend in 6 months [Expired 2/10/20]

Capital One Spark Cash Business Credit Card
$500 Cash back
Earn a one-time bonus: $500 after $4.5K spend in 3 months

No Annual Fee First Year, Then $95

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: Up to $2,000 Cash Back: Earn a one time bonus: $500 after $5K spend in 3 months from account opening and earn an additional $1,500 when you spend $50K in the first 6 months of account opening [Expired 1/27/20]

Chase Southwest Airlines Rapid Rewards Premier Credit Card
40K points
40K points after $1K spend in the first 3 months

$99 Annual Fee

Be sure to choose the card you want after clicking through the link. This card is known to be subject to Chase's 5/24 rule.

Recent better offer: Up to 75K points: 40K points after $1K spend in the first 3 months plus 35K after $5K spend in 6 months [Expired 2/10/20]

Chase IHG® Rewards Club Traveler Credit Card
75K points
75K after $2K spend in 3 months

No Annual Fee

Hilton Honors American Express Surpass Card
125K points
125K after $2K in the first 3 months. Terms apply. See rates & fees.

$95 Annual Fee

Virgin Atlantic World Elite Mastercard
Up to 35K miles
30K after $1K spend in first 90 days + 5K for adding 2 authorized users

$90 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: 75K: 20K after first purchase + 50K after $12K in 6 months + 5K for adding 2 authorized users

The Hawaiian Airlines® Business MasterCard® issued by Barclays
Up to 60K miles
50K after $1K in the first 90 days + 10K after a purchase is made on an employee card

$99 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: 60K after $1K in the first 90 days + 10K after first purchase on an employee card [Expired 8/19]

Hilton Honors American Express Card
75K points
75K after $1K spend in 3 months. Terms apply. (Rates & Fees)

No Annual Fee

Note that Amex is extending the timeline to meet minimum spend by 3 months for applications approved between 12/1/19 and 5/31/20. See this post for more info.

Alternate offer: You may see a better offer that includes a $100 statement credit during the booking process at Hilton.com.

The Hawaiian Airlines® World Elite MasterCard® issued by Barclays
60K miles
6after $2K spend in 90 days

$99 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Alternate offer: You may be able to get 60K miles after 1st purchase via paper application distributed in-flight.

Recent better offer: 50K after $2K spend in 90 days + 25K after $6K total in first 12 months

UBS Visa Signature Business
Up to 50K points (call to apply)
25K after $5K spend in 3 months + 25K after $50K spend in 12 months
(Offer Expires 7/31/2020)

No Annual Fee

UBS Visa Signature
Up to 50K points (call to apply)
25K after $5K spend in 3 months + 25K after $50K spend in 12 months
(Offer Expires 7/31/2020)

No Annual Fee

HSBC Premier World Elite Mastercard® credit card
50K points
50K after $4Kspend in 3 months

$395 Annual Fee

Choice Privileges® Visa Signature® Card issued by Barclays
32K points
32K after $1K spend in 90 days

No Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: 64K points: 32K after $1K spend in 90 days + 32K after an additional $2K spend within the first 180 days

Korean Air SKYPASS Visa issued by US Bank
30K miles
30K miles after $3K spend in 90 days

$95 Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: 40K after $2.5K spend targeted (last reported 2/26/2016)

30K: 15K after first purchase + 15K after $2k spend in 90 days

25K: 15K after first purchase, 10K after $2K spend in first 3 months (expired 1/18)

Wells Fargo Cash Wise Visa® Card
$150 Cash Back
$150 after $500 spend in the first 3 months

No Annual Fee

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Alternate offer: Some people are targeted (in their online Wells Fargo account or via snail mail) for 3% cash rewards for the first year up to $30,000 spent)

Citi Rewards+ Card
15K points
15K points after $1K spend in 3 months

No Annual Fee

American Airlines AAdvantage MileUp Card
10K miles + $50
Earn 10K AA miles + $50 statement credit after $500 spend in 3 months

No Annual Fee

Blue Cash Preferred® Card from American Express
$250 Cash Back
$250 cash back after $1K in the first 3 months. Terms Apply.

$95 Annual Fee

Blue Cash Everyday® Card from American Express
$150 Cash Back
$150 cash back after $1K in the first 3 months. Terms apply.

No Annual Fee

Note that Amex is extending the timeline to meet minimum spend by 3 months for applications approved between 12/1/19 and 5/31/20. See this post for more info.

Info about this card has been collected independently by Frequent Miler. The issuer did not provide the details, nor is it responsible for their accuracy.

Recent better offer: $250 after $1K spend targeted (last reported 10/2015)

Up to $300: 10% cash back on purchases at U.S. Restaurants in the first 6 months, up to $200 back. Plus, earn $100 back after $1K spend in 3 months. (Expired 5/3/17)

Discover it® for Students
$50 + First Year Double + $20/year
Get $50 after first purchase. All cashback earned in first 12 months will be doubled including 5% earned in rotating categories. Plus, get $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.

No Annual Fee

Discover it®
$75 + First Year Double
Get $75 after first Amazon purchase. All cashback earned in first 12 months will be doubled including 5% earned in rotating categories.

No Annual Fee

Royal Caribbean® Visa Signature® Credit Card
10K points + $50 Air2Sea program discount
10K points + $50 airfare discount: 10K after $1K spend in the first 90 days + $50 Air2Sea program discount after $3.5K total in first 90 days (excludes students)

No Annual Fee

BBVA
ClearPoints Credit Card
$100 statement credit
$100 statement credit after $1.5K in first 90 days. Note: This card is not available online without an invitation code. You may need to first open a checking account and then apply by phone or apply in-branch.

No Annual Fee

Discover it Miles - Double Miles your first year
$50 + First Year Double
Get $50 after first purchase. All miles earned in first 12 months will be doubled. This makes this a 3% cash back card for the first year.

No Annual Fee

Citi Rewards+ Student Card
2.5K points
2.5K after $500 spend in 3 months

No Annual Fee

Citizens Bank Cash Back Plus® World Mastercard®
5% back everywhere until 3/31/20
5% back everywhere through 3/31/19: Card ordinarily earns 1.8% back everywhere. There is currently an in-branch offer to earn an additional bonus of 3.2% back everywhere through 3/31/20 (to be paid out in May 2020)

No Annual Fee

Citi Double Cash Card

Recent better offer: None

United Club℠ Infinite Card
None
This card does not currently feature any bonus miles but rather waives the annual fee for the first year.

No Annual Fee First Year, Then $525

3. Buy miles cheaply

Several credit cards offer up to 1.5 miles per dollar for spend. In these cases, a 1.87% tax payment fee means that you can essentially buy miles for 1.22 cents per dollar. Even better, some cards earn 2 miles per dollar.  The Amex Blue Business Plus credit card earns 2 Membership Rewards points per dollar on up to $50K spend per year. And the Citi Double Cash card earns 2 cents per dollar uncapped. Those cash rewards can be converted to Citi ThankYou points and then to airline miles. With these 2X everywhere cards you can essentially buy miles for 0.92 cents per dollar.

2X Example:

  • $10,000 tax payment + 1.87% fee = $10,187
  • Miles earned at 2X = 20,374
  • Cost per mile = $187 / 20,374 = 0.92 cents per mile

1.5X Example:

  • $10,000 tax payment + 1.87% fee = $10,187
  • Miles earned at 1.5X = 15,281
  • Cost per mile = $187 / 15,281 = 1.22 cents per mile

Cards that offer 2X airline miles per dollar:

Cards that offer 1.5X airline miles per dollar:

4. Earn valuable big spend bonuses: elite status, free nights, companion pass, etc.

Many credit cards offer bonuses for meeting high spend thresholds. You can find a comprehensive list here: Best big spend bonuses. Here are a few examples:

  • Amex Delta Reserve or Delta Reserve Business: Spend $30,000, get 15,000 Medallion Qualifying Miles (towards elite status). At $60,000, $90,000, and $120,000 you’ll get another 15,000 Medallion Qualifying Miles.
  • Amex Delta Platinum or Delta Platinum Business: Spend $25,000, get 10,000 Medallion Qualifying Miles (towards elite status). At $50,000 spend, get another 10,000 Medallion Qualifying Miles.
  • Southwest Plus, Southwest Premier, or Southwest Business: With Southwest, when you earn 125,000 points in a calendar year (including points earned from credit card spend) you get a companion pass good for an unlimited number of flights for the rest of that year and all of the next calendar year.
  • Barclaycard JetBlue Plus, or JetBlue Business: Spend $50,000 and get Mosaic status which offers free changes and cancellations; free checked bags; expedited security; early boarding; free drinks; enhanced point earnings; and 15,000 bonus points upon qualifying.

5. Liquidate Visa/MasterCard gift cards cheaply

Visa and MasterCard gift cards are debit cards. As such, they qualify for low flat fees for debit tax payments: $2.00, $2.55, or $2.58 (depending upon the tax processor you use). In other words, your cost to liquidate $500 gift cards will be approximately half a percent (0.5% to 0.54%). That’s pretty cheap.

If you use $500 Visa/MasterCard gift cards, then you can pay the following amounts:

The biggest problem with this is the IRS imposed 2 payments per processor limit. This means that you can liquidate no more than 6 gift cards per type of tax payment.  In the past, Official Payments allowed more payments via phone.  Recent reports, though, indicate that this is no longer the case.

See also: Best options for buying Visa and MasterCard gift cards.

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N W
Guest
N W

Do Simon mall $1000 gift cards work? That would help reduce costs

Frank
Guest
Frank

Yes, they are just VISA debit cards and will work like any VISA bank debit card.

A C
Guest
A C

frank, did you need to set up a pin on their (visa debit card) website? or last 4 digits of card is pin?

veeRob
Guest
veeRob

I actually came here to post a comment on this topic.

Since the Simon $1k cards have been out, I’ve been using them to pay my estimated taxes. On OfficialPayments.com, they correctly code as a debit card, so I’m paying $7 ($5 for the card + $2 fee) vs. $18.70 fee on Pay1040.com. Using a 2% card, that’s a $13 profit instead of $1.30 profit. Obviously more work, but if you’re buying 5-10 cards at a time, it’s totally worth it.

N W
Guest
N W

Are you saying they don’t code as debit on pay1040.com? How about on payusatax.com?

veeRob
Guest
veeRob

I haven’t tried as OfficialPayments.com has the lowest debit fee, and $2,000 per quarter is enough for me.

nnd1308
Guest
nnd1308

Thanks for sharing. Once the payment made, I would assume, 1040 will have a place to show these estimated payments so to receive the refund. Is that correct? Going to try this first time so want to understand the refund part (key point)

veeRob
Guest
veeRob

@nmd1308 Yes, of course. My tax prep software asks about payments as part of the interview process, and looking back at my 2018 taxes it filled out a Schedule 5 for payments and landed on Line 17/18 of my 1040.

Dave
Guest
Dave

Everybody needs to do what works for them, but I find $500 Visa debits from the supermarket to be more advantageous. I can save $34 or $44 (BCE) per thousand. (nobody is making a profit, just getting a discount on your tax bill) BCE is limited to $6000 per year, but with a few 5% category cards you can do better than the Simon Mall cards and a 2% CC.

Lily
Guest
Lily

I’m so new to this, but can you explain more about $34 or $44? What is BCE?

Nick Reyes
Editor

He’s talking about cash back earnings.

BCE = Blue Cash Everyday (an Amex card that earns 3% back on the first $6K per year spent at US Supermarkets (then 1%). The BCP – or Blue Cash Preferred — earns 6% back on the first $6K (then 1%) but has an annual fee (the BCE does not).

So $1K in Visa Gift Cards at a US Supermarket = $30 cash back on the BCE (3%). I assume he’s getting to $34 or $44 based on fuel points. Kroger often runs 4x fuel points, so every $250 in GCs can get you $1 off per gallon on up to 35 gallons of gas. Then you’re paying more in activation fees (since you’d be buying $100 cards with higher activation fees as a percentage), but the fuel points might make up for it if you have a use for the gas (which is I assume where he’s getting his range).

Xandy
Guest
Xandy

I don’t think the “$34 or $44 (BCE) per thousand” relies on Fuel Points, because Dave said “$500 Visa debits” which are variable load and don’t earn Fuel Points (as Nick indicates he knows by talking about “buying $100 cards with higher activation fees as a percentage”). I think $44 is on BCP (even though Dave said BCE) and goes like this:
BCP cash back: ($500 + $5.95) * 2 * 6% = $60.71
minus activation fees: $60.71 – ($5.95 * 2) = $48.81
minus redemption fees: $48.81 – ($2.59 * 2) = $43.63
$43.63 rounds to $44
If they worked at OfficialPayments, that would be $44.81.
“$34” would presumably be using a 5% category card as Dave mentioned, as that would be $10.12 less.

Dave
Guest
Dave

Xandy is correct.
Sorry, meant to say BCP, not BCE. Can’t get gas rewards on Visa or M/C gift cards unless you run through some more steps I won’t post here. The M/C gift cards don’t work as well for tax payments in my experience, so Visa it is. On a good month you can get a reduction or elimination in activation fees at Safeway (and sister stores).

freqflyercoll
Guest
freqflyercoll

has this worked for you recently? I just tried making a payment for the first time this year with an online order of gift cards from Simon mall, but official payments said they couldn’t process the card. I just activated the cards yesterday, and was able to register it this morning on Simon’s site, so perhaps I should give it another day to make sure everything went through fine with the activation/registration.

veeRob
Guest
veeRob

Elsewhere in the comments we discuss that that site is not working currently.

freqflyercoll
Guest
freqflyercoll

thanks for enlightening me! I found the discussions elsewhere in the comments now.

V S
Guest
V S

Bank of America premium Rewards is my go to card for income tax and property tax. I am platinum honors so get 2.625 back every time. My city/school tax charges 2.25% convenience fee and I still come out ahead. I normally pay them a day after my billing date so I get almost 2 months of float.

Eric
Guest
Eric

Be careful. I got charged a cash advance fee for that. And BOA refused to refund the fee.

James
Guest
James

I use my Amex BBP to pay est taxes each quarter since some of my pay is SSDI which I don’t have withholding from…considered having my company not take taxes out at all and pay it all with the BBP, but haven’t bit that bullet yet.

CaveDweller
Guest
CaveDweller

Great Job I tell that to people and it gos right over their head . The gov doesn’t care as long as u pay in the proper quarter .Once in 15 years I paid late $27 fee or whatever .
U can get that spending way u there too .
CHEERs

Frank
Guest
Frank

Firstly, you’re wrong – I love paying (at least Federal) taxes. I get 2.65% back on my BofA Premium card (with Preferred Rewards Platinum Honors) and pay 1.87% making me a profit. State taxes, not so good (sometimes I “buy” AMEX points with my Blue Business card (2x MR points)..

Erik
Guest
Erik

Any tips on CA FTB taxes?

Lrdx
Guest
Lrdx
Frank
Guest
Frank

Sometimes I use my Amex 2x card but the fee is a higher percentage than Federal.

AlexL
Guest
AlexL

Greg, how many times you can pay via OfficialPayments.com in a year? 2, 6, or 8?

JohnW
Guest
JohnW

12, 2 per quarter, 2 1040 and 2 1040 extension.

frugalman
Guest
frugalman

Thank you for reminding me that I can still pay 2019 estimate tax, Greg!

I have some big spending requirement on an Amex card. This method comes at perfect timing: First, as I likely overpay the estimate tax, this fund will come back to me soon in April when I file 2019 tax report, a MS-like loop. Second, Amex becomes more sensitive on what qualifies a legit spending. Buying gift cards could be risky. Amex by no means has excuse to deny this spending. One stone two birds!

Guys, if you have a big spending task now, OVERPAY YOUR 2019 ESTIMATE by Jan 15 (next Wednesday)!!!

CaveDweller
Guest
CaveDweller

Yup real easy file early and get the money back . I think Fed refund was like 14 days last year . I think I have $8k on my United card in 2 weeks need $10k for 65k points deal . I hate GC’s don’t trust them.
CHEERs

tro
Guest
tro

Once Jan 15 passes, is it still possible to overpay for 2019 taxes to get refunded quickly?

dave
Guest
dave

How long does it typically take for a payment to post to the IRS website?

Freeman Grover
Guest
Freeman Grover

Could you comment on the payment of state/county/city property tax payments? Would these taxes be treated much like estimated taxes as far as the fees and not counted as “cash advance” – in my location, we can pay our property taxes in quarterly payments during the first 6 months of the year.

Terry
Guest
Terry

Does anyone know if OfficialPayments.com is again accepting US Bank prepaid visa gift cards (purchased at Kroger) for payments? I have had recent success with Pay1040.com and PayUSATax with these cards but have not tried at OfficialPayments.com since they started declining them last year.

dave
Guest
dave

Worked for me yesterday. Interestingly, I used mine at Officialpayments because the USB Visa no longer seem to work at Kiva. I wonder if the issue is certain ranges of card numbers for some reason? Paypal says the issue is on the US Bank end. How long does it take for these payments to post to IRS? I paid yesterday but on IRS website payment doesn’t show yet

D Jack
Guest
D Jack

Great article. Watch out for AMEX supermarket category. Large grocery chains Ralphs, Albertsons, Vons were not recognized as being in this category last time had card–all the grocers near me. Asked CSR if they are now represented. Replied only way to tell is to spend $95 on the card, go to grocery, see if purchase there gets the benefit in statement. This trap might apply elsewhere in the country.

Jason
Guest
Jason

For Plastiq, they have a specific page for paying taxes, but it’s not clear if that qualifies you for their 1% fee promo. I’m about the boop the button to simply pay “Internal Revenue Service”, and get the 1% promo. Has anyone gone this route and confirm that the feds receive everything correctly? Just putting my SSN in the memo field.

Rob
Guest
Rob

Great post. Question: am I correct that once one start making estimated quarterly tax payments that one must continue to so for every quarter until end of fiscal year? Can one make Q1 payments, skip Q2 and Q3 and then make (or even skip) a final payment in Q4?

I understand the advantage of continue to make estimated quarterly tax payments for the miles/points/cashback rewards, but want to know if skipping would be okay.

Steve
Guest
Steve

My understanding (though I’m not an expert) is that skipping quarterly estimated payments is fine, unless your reason for making estimated payments is to avoid an underpayment penalty. See how Form 2210 calculates the penalty. And even if some amount is needed to avoid penalty, it looks like it should be fine to pay 50% in Q1 and skip Q2, instead of 25% in Q1 & 25% in Q2.

TomT
Guest
TomT

It is worth noting that Navy FCU treats Plastiq payments as NOT qualifying for their minimum spend requirements (MSR).

Gene
Guest
Gene

@ Greg — I suspect that all three of these processors are not accepting 1040-ES payments for 2020 right now. I tried to make an 2020 1040-ES payment at Pay1040.com last night and received a message that I should return on March 1, 2020 when they begin accepting these payments. I believe that all three processors will begin accepting these payments on March 1, 2020, so this is likely just temporary (and scheduled, so nothing to be alarmed about).

Terry
Guest
Terry

I was thinking the exact same thing when I first saw Greg’s update. Pretty sure that you are correct.

Odie
Guest
Odie

Does anyone know how to use Plastiq to pay taxes to states that are not supported by their dedicated tax page? Can I add the state’s office of tax and revenue as a payee from the regular Plastiq website? Thanks!

Greg
Guest
Greg

Greg – I really appreciate your balanced article. Reading the comments below I can see how paying my taxes quarterly is the best way to go. But I am no where near the level of leveraging(or comfortable yet) my CC for points to do this yet. Many of us who read your blog are still newbies, so reminding us about signing up for a good CC to pay our taxes in April to help cover the spend requirement is really helpful. I know many of your readers are way beyond that, but for me this was great!
Thanks for helping us new to the hobby think of an easy way to get those sign up bonuses.

Mark
Guest
Mark

In the past, I’ve used my AMEX BBC with Official Payments. Last year, I had a targeted offer for an additional 25K Marriott points for each $25K of spend on one of my Marriott cards up to $100K spend (effectively making the earning 3 Bonvoy points per dollar “like the old days” as long as I spent in exactly $25K increments), so I maxed that out (300K Marriott points for $1,870). This year, I’m considering using two Hilton Surpass cards (mine and my wife’s) that each require $15K spend to get a free weekend night + get 3 Hilton point per dollar spent. So, making a total of $30K of tax payments will cost $561 and will net 90K Hilton points (worth ~$540) plus two free Hilton weekend night certs + Diamond Status for 2020 and 2021. I would rather max out the AMEX BCC $50K 2 points per dollar spend over the course of the year on spend that DOESN’T cost 1.87%; and I can always use my December 2020 estimated payment to finish off whatever spend on the card under $50K remains. Sound reasonable?

Peej
Guest
Peej

I used the IHG Premier Card which has 4X back for the first year. (I signed up for that offer)
It’s basically buying IHG points for $.0046 plus I got the extra 10,000 point bonus for spend on the card. I’ve been getting more than a cent per point value using the 4th night free award.

Joint Filer
Guest
Joint Filer

If you are filing Married Joint, can both the ‘taxpayer’ and ‘spouse’ (order on the tax return) each do estimated payments under their individual tax ID numbers and then combine the payments when they file their return for a refund?

Jeff
Guest
Jeff

I have done this each and every year without issue.

GMan Guest
Guest
GMan Guest

Great article. Do you know if I could charge someone else’s federal taxes without causing problems? I’m retired but my adult kids have healthy incomes. As the debit card tactic gets tougher use with AmEx, it occurred to me that maybe I could pay some of their estimated tax bills, get reimbursed by them, and eat the processing fee myself.

Nick Reyes
Editor

I don’t think the IRS cares who pays as long as someone does.

neil
Guest
neil

I have recently used a Chase United personal mileage plus card to test the card payment and whether it counts towards the initial spend requirement using Pay1040,com. After the charge posted, I was told by a chase representative that it does not count. Does anybody have any experience with Chase United Business Mileage Plus cards and if tax payments count towards the initial spend requirement? Does it matter what payment company you use?

Neil
Guest
Neil

So I received more information today. After reaching a US representative of Chase, they told me that the payment to Pay1040.com does indeed qualify as a purchase that goes towards the initial spend requirement. The first customer service representative was not US based and apparently gave me incorrect information.

Franz
Guest
Franz

Are debit/gift cards still viable for payments? I’ve just tried it twice and got an error that transaction can’t be processed. I’ve used a vanilla gift card in this instance

Sunny
Guest
Sunny

I got same error on OfficialPayments which has lowest fee, but processed correctly on other two sites. i’m using visa GC from US bank

Raghu Narayanan
Guest
Raghu Narayanan

Sam here, I called Black Hawk network. They told me official payments is processing this a recurring transaction instead of one tiime. So I emailed official payments and they replied they will process either way

Sunny
Guest
Sunny

Then will official payments solve this issue?

Raghu Narayanan
Guest
Raghu Narayanan

No , CSR not very helpful. This is the official text I got from their CSR

“Thank you for contacting Official Payments. We are happy to assist you with your inquiry. Our payment will sometimes show up as recurring, depending on the bank, but it is only a one time payment. Unfortunately we do not have the ability to alter this. For assistance with getting the approval you would have to speak to your card issuer for assistance in getting the payment authorized.”

Ian
Guest
Ian

I ran into this exact same issue. I called Black Hawk Network, and read them the email text you received from Official Payments. I was told that the terms and conditions of the VGC does not allow for recurring transactions and so there’s nothing they can do to authorize charge on their end. As such, it looks like the seeming back and forth of VGCs working/not working on Official Payments is a matter of whether Official Payments is processing the charge as recurring or not (and whether the VGC you’re using allows for recurring charges).

Raghu Narayanan
Guest
Raghu Narayanan

Ian
Mastercards work. As they say, don’t fight the fed. Just use MC

Terry
Guest
Terry

Just tried today on OfficialPayments. Would not process. I was able to make a payment back in January but not this time.

Raghu Narayanan
Guest
Raghu Narayanan

I think this issue started March 1
Raghu

Terry
Guest
Terry

I recall that the same problem existed last year and I was unable to use gift cards for a long time. Then somebody posted that it was working again and I was able to make a January payment. I wonder why it goes back & forth from working to not working. Very frustrating. . The two other payment sites do not seem to have this problem.

TJ S
Guest
TJ S

OfficialPayments worked with metabank visa on March 12th (twice actually), but not working as of June 2020 🙁

dizzy
Guest
dizzy

Are virtual GC’s ok for this? I have only used physical vgc’s in the past.

Ken
Guest
Ken

What are the cutoff dates for resetting the 2 estimated tax payment limit per quarter with the due date extensions to July 15?

rfclub
Guest
rfclub

Another problem with Vanilla VGC. Just bought one from Walgreens early this month and try to pay 1040ES. It failed with officialpayments, and it also failed with payusatax saying that it is not a debit card. Finally, it can only be used at pay1040.

GMoney
Guest
GMoney

I am confused – is this just for people with 1099’s? what about w2? Should I basically be maxing out withholding ?

freqflyercoll
Guest
freqflyercoll

so this is what I did last year and it seems to have worked. I reduced withholding from my employer and my wife’s employer to 0 for federal taxes, and then just paid estimated taxes. I believe for W2, if you do this, you still need to pay your estimated tax liability quarterly, or you will end up paying a penalty at end of year. It’s basically 25% of the taxes you owe per quarter.

I ended up overpaying my taxes last year because I didn’t drop withholding until midway through the year, but because my withholding was too low in the first part of the year (due to some other issues in not calculating it correctly), I actually still ended up paying a penalty.

So this is nice because you can get up to a few percent of the taxes you pay back via withholding. One tip I have is to make sure you set the money aside from each paycheck that you will need to taxes, since your employer is no longer doing that for you.

freqflyercoll
Guest
freqflyercoll

Also, if needed, to increase the number of payments, I was able to pay separately on each of the sites for both myself and my wife. We file jointly, but the IRS’s systems will combine the payments under each of our names automatically.

I just realized the verbiage around withholding is a little confusing, since normally you specify a number of exemptions. our employers’ payroll systems allowed us to set a specific withholding amount, so I had them both set the amount to 0. It’s easier than trying to figure out how many exemptions you need to ask for.

Nick Reyes
Editor

Glad to hear that you’ve paid separately and they have automatically combined the payments. That’s what I wanted to know. Haven’t finished up my taxes yet, but I made separate payments and was counting on this working (paying separately even though we file jointly). Thanks!

freqflyercoll
Guest
freqflyercoll

I had to make a couple of calls to the IRS last year to get this info. The first couple of people told me that I would have to call in after filing taxes to get the IRS to manually transfer the funds from my spouse’s account to my own.

The third person I talked to told me that as long as the information in the IRS account and tax return matched, their systems would generally automatically move the payments from my spouse’s account into my own.

Randy Ly
Guest
Randy Ly

When you pay separately under your wife I assume you are putting her as primary. Does your wife’s payment show up on your online tax transcript or hers? So far I only see my payments and the extension payment post under my account.

Vaibhav Shetge
Guest
Vaibhav Shetge

>>It’s basically 25% of the taxes you owe per quarter.
Dumb question here. How do u calculate the taxes you owe part. I have been paying taxes here for the past 10ish years but havent paid attention to how the amount is established. Usually the employer and the tax software take care of this for me… clearly I missed out on some points in that route.
Do you just look at last years returns, and if there are no significant changes this year on ur part then add a few percentage for inflation to last years amount owed?
I guess what I am trying to understand is how do u make sure you dont underpay for sure, but overpay by a small amount as the overpayment will be a long term loan..

IH8ATETAXES
Guest
IH8ATETAXES

Just a small correction in your corrected “Important Due Dates” table at the start of the article– 2nd quarter 2020 estimated taxes are due JULY 15th, 2020.

https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2

No % in payin’ the piper early…{:-)

A B
Guest
A B

Now that we can effectively cash out URs at 1.5cpp and given that traveling this year isn’t really a thing right now, is it better to pay taxes with a Citi DC or a CFU?

The way I see it, DC makes more sense if you’re planning on transferring to miles. Using Greg’s example, $10K in taxes would = 20,374 miles at a cost of $187.

But CFU makes more sense if you’re planning on redeeming as statement credits (effectively getting 2.25% CB) = $229.21 minus the fees = $42.21 net.

Taken together, the true cost of those miles is the $187 financial cost plus the $42.21 opportunity cost of lost profit. That means in truth you’re “buying” 2X miles at 1.125cpp.

Those people with access to a 3% card would be doing even better in terms of the CB and therefore would see an even higher cost to buy those miles.

In any case, in some years, it’s worth buying the miles. But this year I feel like cash is king.

veeRob
Guest
veeRob

While I can’t guide you on which card to use because as you see it’s a complicated decision, I can give you a recommendation to save a ton of money if you don’t mind an extra step. I posted earlier in the comments about it.

You can buy Simon GC’s for $5 apiece + a processing fee now that they’re doing it online. There’s a sale for 5 more days making the cost to acquire the Simon GC’s very minimal. Buy as many $1,000 denomination cards with whichever card you choose to earn the same amount of points. But these GC’s code as a debit on the tax sites saying you $100’s in fees. Well worth the extra steps + time in my opinion.

A B
Guest
A B

I’ve never had luck with those. Online orders always seem to get canceled, plus you’d be capped at $5,000 from those anyway with the remainder going on a CC directly. That $5K would save you $81 in fees at a cost of $25 to acquire. All that work for $56 isn’t worth it to me.

veeRob
Guest
veeRob

Never heard any reports of Simon GC orders getting cancelled, and not sure who you’re saying has a 5k limit.

$50 for about 15 minutes of time ordering the cards seems pretty good to me! If your time is worth over $200/hr I’m jealous! I’m definitely not there yet.

A B
Guest
A B

You can only make 6 total payments. So 5 with GCs and 1 with your CC for the remainder.

And you’re really lucky if you’ve never had an order cancelled. Giftcardmall in particular is a major culprit!

veeRob
Guest
veeRob

You’re paying that much in taxes?! No wonder $200/hr is nothing to you!

A B
Guest
A B

I fell into Trump’s tax cut donut hole. Went from a $6K refund to a $12K debt with no change in income. But I could no longer itemize and lost a lot of the dependent benefits.

This is the first year I’ve ever had to worry about paying.

Terry
Guest
Terry

That seems almost unbelievable. If you lost a lot of dependent benefits, that must mean you have a lot of dependents. Didn’t you pick up any additional child credits? Also, why can you no longer itemize?

KayKay
Guest
KayKay

Hey guys, does anyone know if the new 5p bonus category for online spending with the citi prestige will work here ?
If not does it make sense to use the new Hyatt card that gives you 3 qualifying nights For every $5000 you spend plus the $15000 free night.

L K
Guest
L K

Well normally you can make 2 payments per processor for the Apr 15 and Jun 15 deadlines (to cash out GC), but this year both Federal deadlines are now July 15, and I think they will take only one set of 2 payments each for the 1st and 2nd quarter estimated taxes. Also some states might still have the June 15 deadline for state taxes.

Yuan
Guest
Yuan

Do you figure out if the processor adjust accordingly to meet the July 15 change?

Randy Ly
Guest
Randy Ly

FYI. Official Payments is accepting Visa Gift Cards as of yesterday. I’ve successfully used simon visa gift cards no problem.

Yuan
Guest
Yuan

Does it accept MGC?

veeRob
Guest
veeRob

Thanks for posting! Made my 2nd quarter payments today.

Frank
Guest
Frank

“For this relief much thanks”.

Anita Parsa
Guest
Anita Parsa

Do you know if paying taxes would code as “online spending” to BofA?

Larry
Guest
Larry

Probably worth updating that plastiq fee is going up soon.

trackback

[…] a debit card and I haven’t been making any extra liquidation trips. I already used some to pay taxes. That said, I inevitably end up at the grocery store once per week for something, so if I were able […]

02nz
Guest
02nz

PayPal is a 5% cash back category for Discover in Q3, and I bet Chase Freedom will be 5X UR for Discover in Q4, so that’s a way to actually pay taxes at a discount with payusatax.com.

Sam
Guest
Sam

I am an individual with no business. Yet to file my personal taxes and I only owe about $900. My return is completed and Ready to file from turbo tax.
I need to make SUB spend on Amex business platinum to cover about $7k
Assume I can make a single $7k payment. Will I have any problem with Amex or IRS?
When will IRS refund over payment? Sometime soon or after filing taxes in 2021?

Miles
Guest
Miles

Just a quick warning for anyone looking to do this now (June 2020) – a lot of tax returns, yes even electronically filed ones, are seeing very long processing delays for refunds. Do not overpay by more than you can float right now.

dizzy
Guest
dizzy

This has been such a cluster fk for me this year. Simon cards worked brilliantly. Great. Then I had to spend a few days calling the IRS- since I hadn’t entered in that I made payments on my tax return (duh, I owed money, how would I know what to pay?) they froze my refund. Finally got them to release it hopefully it will come now couple months after I paid it. I can pay my PA state taxes with officialpayments….buttt, online it keeps saying that I don’t qualify to make this payment either bc name doesn’t match (it does) or it’s first time paying taxes in PA (it’s not, I used OP last year). I tried calling and it’s on this circular loop of entering my ssn and verifying first 4 letters of last name (I only get 2 letters in before it asks me to enter in soc again). However, still not as crazy as PUA is, count my blessings.

Miles
Guest
Miles

How did you get in touch with the IRS about your refund? I was under the impression most of the offices were closed.

dizzy
Guest
dizzy

I called them?

Miles
Guest
Miles

Glad it worked for you. In several MS forums and among friends who are tax preparers, there are a lot of complaints right now about refunds being delayed a long time, and it’s apparently difficult to get ahold of people to help.

Pauline
Guest
Pauline

If nothing else, you could use PayUSATax to use the 5% cash back for the Discover 3rd quarter paypal category. Current credit card fee on that site is 1.96%, so you would be coming out ahead. I came across this as I was on the paypal website trying to figure out how to max that 5% cashback category on my two discover cards, since there’s no way I could spend that much on ebay within 3 months and haven’t figured out how to otherwise maximize that category thru ms.

skippy
Guest
skippy

Does anyone know if I’ll be able to make 4 payments per processor within the next few days to account for Q1 & Q2 Estimated payments? I’ll do Q1 first and then do Q2 closer to July 15th. I just did a payment with Official Payments, but it didn’t ask to identify the Quarter.
BTW, I tried to pay with Visa Debit card on OP earlier this month and it didn’t work, so thank you for posting that update. 🙂

Yuan
Guest
Yuan

I guess it really doesn’t matter and they don’t differentiate how you pay Q1/Q2 estimate as both are due 7/15/2020 now. You can claim all your payments you make before 7/15 are for your Q1 estimate, or half of them for Q1 and half for Q2, since you can’t specify if a specific payment is for Q1 or Q2 explicitly.

skippy
Guest
skippy

Well, I guess I’ll find out for sure in a week or so when I try to do my Q2 payments.

Yuan
Guest
Yuan

I doubt you can find out as technically you can pay Q2 estimate first and Q1 next as both have 7/15 as deadline and you don’t specify which quarter you pay for when making the payments. This means IRS doesn’t know which is which, and all they know is what you pay before 7/15 are for Q1+Q2. That’s why I said it really doesn’t matter.

Rick
Guest
Rick

Hi Greg/Nick,

Hope you have a wonderful holiday this weekend!

If I charge up to my credit limit on my Delta Amex Biz Platinum card (ahem, “sole proprietorship”), does it affect my personal credit rating?

I paid my personal taxes today on this card and wonder if I should pay off the amount I charged on the same day so that it doesn’t negatively impact my personal credit.

I thought that a biz acct wouldn’t affect my personal credit, but now that I’ve done it, I’m not sure.

??

Thanks!

Rick

trackback

[…] Pay taxes via credit card 2020 edition […]

Ken
Guest
Ken

Chase BA VISA still has companion voucher for $30K spend in calendar year. Voucher is good for 2 years so I delay reaching the threshold until year’s end. I know BA has high surcharges but for sitting up front, I still find value in it.

Raghu Narayanan
Guest
Raghu Narayanan

It says 2 per processor per calendar quarter.But the quarter clock does ot start on July 1
I have been trying for past 3 or 4 days and both Paytaxusa and pay1040 says , I can make only 2 per calendar quarter. So it is not clear if the clocks starts when YOU made your last payment or Jan1,April1, July1, Oct1
Any ideas?

Christine B
Guest
Christine B

So how does the IRS know I want to apply the payments to my current (2019) taxes and not my 2020 estimated taxes? We owe about 3500 in federal taxes this year. Plan to pay $1500 with my discover via PayPal, $1500 on P2 discover/PayPal, then 2 – $500 gift cards (bought at grocery store with CSP when they the store was giving 3x gas points). So how do the payment processes, or the IRS, know if my $1500 if for 2019 or 2020?