Should I pay my taxes with a credit card?
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March is finally here, which means that the days are getting longer and that this neverending winter is finally coming to a close.
It also means that Tax Day is coming.
If you owe, the most common way to pay taxes is by ACH. This method draws the money directly from your bank account, making it quick and secure with no extra fees.
But if Uncle Sam is asking you to pay up, you can squeeze out some extra rewards by paying your taxes with a credit card.
But doing so comes with an extra fee of a little under 2% of your total tax bill. Is it worth it? It depends on your situation.
Finally, a brief disclaimer: While I’ve written about financial topics for years, I am not a tax professional, and none of this email should be considered tax advice. I don’t know your personal tax situation and cannot advise you. If you have questions about your specific situation and goals, consult a trusted Certified Public Accountant.
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When to consider paying taxes with a credit card
According to the IRS, the lowest processing fee to pay your taxes with a credit card is 1.75% with Pay1040. (ACI Payments charges 1.85%.)
Because paying your taxes with a credit card will cost you this additional fee, there are several scenarios when you may come out ahead:
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Your card earns at least 2% rewards rate: This matters because the points earned makes up for the fee you’ll pay.
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You’re working to earn a signup bonus: Paying your tax bill with your new card could help you hit the minimum spending level you need to earn the bonus.
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You’re working towards earning elite status through spending: This could be an option if you have an airline or hotel credit card that helps you achieve elite status by spending a preset amount.
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The best card to pay your 2024 taxes
Why not double dip? Earn both 2x per dollar and earn a new card welcome offer.
This card ($95 annual fee) is the perfect option. If you open this card and use it to pay your tax bill, you can earn 2x miles per dollar and earn its new card member offer.
For a limited time, this card is offering a special bonus for new members. You can earn 75K bonus miles after spending $4,000 in the first 3 months. Plus, you’ll earn a $250 travel to use in the card’s portal. That’s easily worth over $1,000 in travel.
You could potentially earn the offer by paying your tax bill! Getting $1,000+ in travel for paying Uncle Sam? Sounds like a net win to me.
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Other cards to use for paying taxes
In addition to the card above, there are several other options for cards that earn at least 2X points per dollar:
Another personal card option:
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$395 annual fee card: Earn 75k bonus miles
Business card options:
Example
How would that look if you paid Uncle Sam with a credit card? Hypothetically, let’s say you owe $4,000 in 2024 income taxes.
Tax bill: $4,000
Credit card processing fee: $4,000 x 1.75% = $70
Total expenses: $4,070
Let’s say you used the card I recommended above. It earns 2X miles per dollar spent. (In other words, this is a 2% points reward rate.)
Points earned:
$4,070 x 2X miles = 8,140 miles
When you add in the 75k bonus miles from its new card offer, you’ll have more than 83k miles.
Where can you go with 83k miles? How about Singapore, Frankfurt, Sicily or even Peru in business class? We sent recent Going with Points deals to each of these places for less than 83,000 miles.
Does paying taxes with an airline card help you work on earning status with an airline?
Our guide explains.
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Extra credit: Use credit card offers to save on tax prep
One more thing: Many credit cards offer discounts on tax preparation software, like TurboTax.
Check your card’s offers section to see if you have one. For example, I saved $20 on TurboTax this year by using my card's offer.
Just pay close attention to the offer’s details. You’ll need to add or activate the offer first, pay with the card you enrolled in the offer, and pay by a deadline.
You may also need to spend a certain amount—in my case, I needed to spend at least $39 with TurboTax—to activate the offer.
I also needed to use the issuer’s specific link to redeem this offer. If I had enrolled my card and then simply went to the standard TurboTax checkout page, this wouldn’t have worked.
Your card will be charged the full amount, and then if you did everything right, the savings will be in the form of statement credit within a few weeks.
Heads up—you might be able to file for free! Check the IRS tool DirectFile to see if you are eligible.
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With expert:
Kurt Adams
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Kurt is a writer with too many credit cards in his wallet. Before becoming a credit card points pro, he wrote personal finance and small business content. A graduate of Princeton, he lives in New York City.
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A disclaimer about card names:
Due to the quirks of credit card compliance, we are sometimes not allowed to use the actual names of cards or certain banks in emails. This means we have to resort to using more generic language when talking about some credit cards.
We know this can be confusing or frustrating, but we encourage you to click through to our site, where we can name and talk more candidly about the cards and their benefits. While we are bound by the rules of credit card compliance, our mission will always be to put our readers first and help you travel better for less.
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