Pay taxes via credit card 2020 edition

My guess is that you don’t like paying taxes.  I don’t blame you.  Fortunately, there is a silver lining.  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

Important due dates

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

Pay taxes via credit card: Background

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 2.5%): 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: 2.5%.

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 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 2.5% 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.

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

Fees 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.

View tax payment history: Once you’ve made payments through online processors, 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.

Paying 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, or PayUSAtax.com) to pay your taxes. There is no need to mail in the 1040V payment voucher.

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

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
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

Recent better offer: 75K after $5K in the first 5 months (Expired 1/16/20)

Chase United Explorer Card
60K Miles
60K miles after $3K spend in first 3 months

No Annual Fee First Year, Then $95

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

$89 Annual Fee

Recent better offer: None.

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

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

U.S. Bank Business Leverage® Visa Signature® Card
75K points
75K after $7500 spend in first 4 months

No Annual Fee First Year, Then $95

Recent better offer: None

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

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

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

$95 Annual Fee

Recent better offer: 125K after $3K in first 3 months + free weekend night at first anniversary (Expired 6/27/18)

The Business Platinum Card® from American Express
75K points
75K after $15K spend in the first 3 months. Terms apply.

$595 Annual Fee

Recent better offer: 150K after $20K Spend (Targeted)

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

The Platinum Card® from American Express
60K points
60K after $5K spend in 3 months. Terms apply. (Rates & Fees)

$550 Annual Fee

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]

Delta SkyMiles® Gold Credit Card from American Express
35K miles
35K miles after $1K spend in the first 3 months. Terms apply. (Rates & Fees)

No Annual Fee First Year, Then $99

U.S. Bank Business Cash Rewards World EliteTM Mastercard
$500 Cash Back
$500 cash back after $4500 spend in first 150 days

No Annual Fee

American Express® Gold Card
40K points
40K after $4K spend in 3 months. Terms apply. (Rates & Fees)

$250 Annual Fee

Note that some people find that they are targeted for a 50K offer.

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: 50K after $2K spend in 3 months + 20% back as a statement credit at US Restaurants within the first 3 months (up to $100 back). [Expired 1/9/19]

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

No 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

Avianca Vuela Visa Card
40K LifeMiles
40K after first purchase

$149 Annual Fee

American Express® Blue Business Cash Card
Up to $500 in statement credits
Earn a $250 statement credit after $5K in purchases in the first 6 months and an additional $250 statement credit after an additional $10K in purchases in the first year. Terms apply.

No Annual Fee

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

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

Chase Iberia Visa Signature® Card
Up to 90K bonus Avios (advertised as 120K)
Earn 4x everywhere on up to $30K in total purchases during the first year (then 3x on British Airways and 1x everywhere else)

$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: 100K:
-50K after $3K spend in 3 months
-Additional 25K after $10K total spend in 1st year and a further 25K after $20K total spend in 1st year [Expired 2/19]

Chase Aer Lingus Visa Signature® Card
Up to 90K bonus Avios (advertised as 120K)
Earn 4x everywhere on up to $30K in total purchases during the first year (then 3x on British Airways and 1x everywhere else)

$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: 100K:
-50K after $3K spend in 3 months
-Additional 25K after $10K total spend in 1st year and a further 25K after $20K total spend in 1st year [Expired 2/19]

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

Wells Fargo Propel American Express® Card
20K bonus points
20K after $1K spend in 3 months

No Annual Fee

Delta SkyMiles® Platinum Business Credit Card from American Express
45K miles + 5K MQMs
45K miles + 5K MQMs after $3K spend in the first 3 months + $100 statement credit after first Delta purchase in the first 3 months. Terms and limitations apply.

$250 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)

Delta SkyMiles® Platinum Credit Card from American Express
40K miles + 5K MQMs
40K miles + 5K MQMs after $2K spend in the first 3 months. Terms apply. (Rates & Fees)

$250 Annual Fee

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

No Annual Fee

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)

Blue Cash Everyday® Card from American Express
$225 Cash Back
$225 cash back after $1K in the first 3 months. Terms apply. (Rates & Fees)

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: $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)

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

No Annual Fee

Avianca Vida Visa Card
20K LifeMiles
20K after first purchase

$59 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

Amazon Business American Express Card
Get a $125 Amazon Gift Card + $100 statement credit
Eligible Prime members get a $125 Amazon.com Gift Card upon approval. Additionally, get a $100 statement credit after $3,000 in purchases in the 2% and 1% categories in the first 90 days

No Annual Fee

The Plum Card® from American Express
Up to $600
Earn a $200 statement credit after each $10,000 you spend on the card, up to $30,000, in the first 3 months of Card Membership. Terms Apply.

No Annual Fee First Year, Then $250

The Amex EveryDay® Credit Card from American Express
10K points
10K after $1K spend in 3 months. Terms apply.

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 find they are targeted for an offer of 20K after $2K spend in the first 3 months.

Recent better offer: 25K after $2K spend (Last reported 3/2016)

U.S. Bank Cash+
$150
$150 after $500 spend in 90 days

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. (Rates & Fees)

$95 Annual Fee

Recent better offer: Up to $350: 10% cash back on purchases at U.S. Restaurants in the first 6 months, up to $200 back. Plus, earn $150 back after $1K spend in 3 months. (Expired 5/3/17)

American Express Cash Magnet® Card
$150 Cash Back
$150 back after $1K in purchases in first 3 months. Terms apply.

No Annual Fee

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

Fidelity Rewards Visa
$100 Cash Back
$100 after $1K spend in 3 months.

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

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

Citi Double Cash Card

Recent better offer: None

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

Delta SkyMiles® Reserve Credit Card from American Express
40K miles + 10K MQMs
40K miles + 10K MQMs after $3K spend in the first 3 months. Terms apply. (Rates & Fees)

$550 Annual Fee

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:

  • Citi Double Cash: Earns 2 cents per dollar, uncapped. Cash rewards can be converted to ThankYou points and when paired with a Citi Premier or Prestige card those points can be transferred to a large selection of airline programs.
    Citi Double Cash Card

    Recent better offer: None

    FM Mini Review: 2X rewards for all spend with no annual fee makes this card a winner. Earn 2X everywhere and redeem for the equivalent of 2% cash back or 2X ThankYou points. Pair with the Premier or Prestige card to make points transferrable to airlines.


    Card Type: Mastercard World Elite

    Noteworthy perks: 1X when you make a purchase + 1X when you pay for those purchases

  • Amex Blue Business Plus: Earns 2 Membership Rewards points per dollar on up to $50K spend per calendar year. Points can be transferred to a large selection of airline programs or to a few hotel programs.
    The Blue Business℠ Plus Credit Card
    10K points
    10K after $3K spend in 3 months. Terms apply.

    No Annual Fee

    FM Mini Review: 2X rewards for all spend (up to $50K per year) with no annual fee makes this card a winner.


    Card Type: Amex Credit Card

    Base

    Earning rate: 2X Membership Rewards points on all purchases, up to $50K spend per calendar year (then 1X thereafter). Terms apply.

    Noteworthy perks: 0.0% intro APR on purchases and balance transfers for 12 months from account opening, then a variable rate, currently 13.24% - 19.24%, based on your creditworthiness and other factors as determined at the time of account opening. Terms Apply.

    See also: The new king of everyday spend

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:

  • PayUSAtax.com ($2.58 fee): Make a $497.42 payment.
  • Pay1040.com ($2.59 fee): Make a $497.41 payment.
  • OfficialPayments.com ($2 fee): Make a $498 payment.

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 payment via phone.  Recent reports, though, indicate that this is no longer the case.

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

Last updated on March 26th, 2020

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

Regarding comments: Comments posted at the bottom of Frequent Miler pages and posts are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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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.

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.

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