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Paying USA income, property or other taxes with a credit card

Old Mar 18, 2016, 8:54 am
FlyerTalk Forums Expert How-Tos and Guides
Last edit by: Boraxo
There are three services to pay your U.S. federal taxes: IRS Pay Your Taxes by Debit or Credit Card or Digital Wallet

pay1040.com 1.87% fee on credit (lowered from 1.99% on 01/02/2023). $2.50 flat fee on debit.
payUSAtax.com - 1.82% fee on credit (rate updated 01/03/2024 from 1.85%). $2.20 flat fee on debit.
See this thread about payUSAtax customer service. Many people have reported that they never respond to support requests.
ACI Payments, Inc - 1.98% fee on credit. $2.20 flat fee on debit.

Many states also permit online tax payment; check with your state or this list from MasterCard.

The IRS has a system to view payments, and it's good practice to confirm all payments within a short time frame, so that any rare lost payment issue can be disputed.
Be mindful of time zones if paying on the due date as pay1040.com uses CDT timestamp and payusatax.com uses EDT timestamp.

In general, you're allowed 2 payments per processor above per type of tax (annual and quarterlies being 2 different types, for example). They're not billed as cash advance fees. If 6 payments is not enough to pay your bill you can use a service such as plastiq (2.25% fee). If making multiple payments, it is advised you join here to track your payments link , you will be required to give your banking information and will receive a pin via snail mail
(Confirmed 4/2018 in post #429)

Fees are tax-deductible for C-Corps but not individuals (2018 tax reform eliminated "miscellaneous itemized deductions"). The majority of people will not be able to deduct that expense, check with your accountant.

When making multiple payments at or near your credit limit multiple times, allow yourself 3-5 days between payments for the charge to show up on your card and your bank payment to clear. If you wait until April 15th to make payments, you will only be able to clear the first payment.

Best Credit Cards to use/buy cheap points:
- Any credit card to hit minimum spend and achieve signup bonus or spend thresholds.
- BOA Premium Rewards 2.62% Cashback (Card holder needs to be a Preferred Rewards Platinum Honors member)
- Chase INK Premier 2.5% Cashback on purchases over $5k (Points are not transferable to airline or hotel programs)
- Capital One Venture X 2X Cap One Miles/Points (now transfer to most airline partners at 1:1)
- Amex Blue Business Plus 2X Membership Rewards (capped at $50,000 spend per calendar year)
- Chase United Business Club Card, 1.5X United Miles
- BOA Virgin Atlantic World Elite 1.5X Virgin Atlantic Points
- Chase Freedom Unlimited, 1.5X Ultimate Rewards, paired with a premium card (Sapphire Preferred, Sapphire Reserve, INK Preferred, INK Plus)
- Chase INK Unlimited, 1.5X Ultimate Rewards, paired with a premium card (Sapphire Preferred, Sapphire Reserve, INK Preferred, INK Plus)
- Amex Everyday Preferred 1.5X Membership Rewards, (need to make 30 transactions in a month for 50% bonus)
- Amex Business Platinum 1.5X Membership Rewards on purchases over $5K

Big Spend Bonuses:
- Amex Delta Reserve, spend $60k get 30k bonus miles and 30k MQM
- Citi Hilton HHonors Reserve, spend $10k get free weekend night, $40k, Platinum Status
- Chase Southwest, spend $135k get Companion Pass (WN points are redeemed at $.011, @ 1.87% fee, you're essentially buying the companion pass for $847)
- Chase Ritz Carlton Reserve, spend $10k get Gold Status spend $75k get Platinum Status
- Chase World of Hyatt, spend $15k get one free night

Cash Back cards:
Elan Fidelity 2%
Citi Double Cash 2%

Earn Status/Elite qualifying points:
- American, Delta, Alaska, Hyatt

Pre-Funding allowed:
Amex Charge Cards

Pre-Funding not-allowed:
Chase

Quarterly tax due dates: the 15th of April, June, September, January


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Paying USA income, property or other taxes with a credit card

Old Jan 28, 2023, 9:30 pm
  #706  
 
Join Date: Apr 2019
Posts: 13
I just paid 3 times with 3 different credit cards with PayUSATax. Is this a glitch?
antagon is offline  
Old Jan 29, 2023, 8:50 pm
  #707  
 
Join Date: Nov 2011
Posts: 150
I do not actually anticipate having to pay taxes once I meet my accountant this spring. I'm positive I will get a refund. That being stated, can I still overpay so that I can manufacture spending to my creditcard?
abc5 is offline  
Old Jan 29, 2023, 9:22 pm
  #708  
nsx
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Originally Posted by abc5
I do not actually anticipate having to pay taxes once I meet my accountant this spring. I'm positive I will get a refund. That being stated, can I still overpay so that I can manufacture spending to my creditcard?
Yes. Your risk is “only” that a large refund may prompt IRS scrutiny. I prefer to reduce withholding and make the correct estimated tax payments earlier than required.
EmailKid likes this.
nsx is offline  
Old Jan 30, 2023, 6:05 am
  #709  
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Join Date: Mar 2002
Location: Saipan, MP 96950 USA (Commonwealth of the Northern Mariana Islands = the CNMI)
Programs: UA Silver, Hilton Silver. Life: UA .59 MM, United & Admirals Clubs (spousal), Marriott Platinum
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I overpaid estimated tax in January by $20K for several years in a row, well over 100% more than my total income tax due for the year, and the IRS never bothered me in the slightest. I filed my returns in March.

I can't do that back here in the CNMI, though the local rebate makes up for that in its own way.
Dr Jabadski likes this.
SPN Lifer is offline  
Old Jan 30, 2023, 7:32 pm
  #710  
 
Join Date: Mar 2007
Location: SJC/SFO
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Originally Posted by nsx
Yes. Your risk is “only” that a large refund may prompt IRS scrutiny. I prefer to reduce withholding and make the correct estimated tax payments earlier than required.
I'm doing something similar this year. I've reduced my tax withholding and will make estimated payments of several thousand dollars each 4 times this year, charging them to credit cards for the bonuses. 1st quarter estimated tax is due by April 18. The IRS notes you can opt to pay your entire year of estimated tax on or before that date, if you prefer.
darthbimmer is offline  
Old Feb 16, 2023, 11:33 am
  #711  
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Join Date: Jun 2015
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Just got an email from "Worldpay from FIS" which I guess is the company backing Pay1040:

We are extending a special offer* to our loyal customers who choose to pay their federal taxes again using Pay1040. Experience the convenience of paying your federal taxes electronically while taking advantage of our low fees.

Use your credit card or PayPal and pay a low rate of 1.85% ($2.50 minimum) or your consumer/personal debit card for a low flat fee of $2.20. Pay using all other debit cards at a low rate of 1.85% ($2.50 minimum). A low flat fee of $2.50 applies for cash payments.

Act fast. Our special rate is only good through April 18, 2023.

Wow, a savings of 20 cents per $1000! What a bargain!
Zorak is offline  
Old Mar 6, 2023, 3:11 pm
  #712  
 
Join Date: Apr 2015
Posts: 262
What's the maximum overpayment people have done here without getting their refunds delayed?
I've done $18k last year and I was wondering if doing ~$30k this year would cause issues. Our tax burden is high though ($100k+).
satellite779 is offline  
Old Mar 6, 2023, 4:29 pm
  #713  
 
Join Date: Mar 2007
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Originally Posted by satellite779
What's the maximum overpayment people have done here without getting their refunds delayed?
I've done $18k last year and I was wondering if doing ~$30k this year would cause issues. Our tax burden is high though ($100k+).
I'm curious, with US Treasury Bills now yielding over 5%, at zero risk and paid in cash, what credit card benefit are you earning with significantly higher rate of return?
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Old Mar 6, 2023, 5:09 pm
  #714  
 
Join Date: Apr 2015
Posts: 262
Originally Posted by darthbimmer
I'm curious, with US Treasury Bills now yielding over 5%, at zero risk and paid in cash, what credit card benefit are you earning with significantly higher rate of return?
Signup bonuses/Delta MQD waiver. IRS also pays for delayed refunds (once past 45 days since filing deadline) at 7%. Not planning to get it delayed, but at least the money is not stuck without yielding anytning.
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satellite779 is offline  
Old Mar 6, 2023, 7:14 pm
  #715  
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Genuinely asking, is the delay actually correlated with the amount of the refund? The only significantly delayed refund I've ever had was a couple years ago when everything was severely backed up, and it was a relatively large refund for me, but I attributed that more to COVID than the dollar amount.
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Old Mar 6, 2023, 8:38 pm
  #716  
 
Join Date: Feb 2011
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Originally Posted by abc5
… can I still overpay so that I can manufacture spending to my creditcard?
Originally Posted by SPN Lifer
I overpaid estimated tax in January by $20K for several years in a row, well over 100% more than my total income tax due for the year, and the IRS never bothered me in the slightest. …
Originally Posted by satellite779
What's the maximum overpayment people have done here without getting their refunds delayed?...
I just discussed my 2022 taxes with my accountant. My federal and state taxes for 2021 were by far the highest I ever paid due to a good year for the stock market and high investment income, mainly distributions on mutual funds I’ve owned for many years and would have to pay even more taxes if I sold them.

Subsequently, last year I made estimated tax payments of 110% (“safe harbor”) of 2021 taxes, much of that minimum spends on credit cards. My 2022 income was MUCH lower, mainly due to a terrible year for the market and lower fund distributions and some short term (tax harvesting) losses. Thus a 6 figure federal refund and a mid 5 figure state refund expected in 6 weeks.

I told him to request full refunds, nothing applied toward future taxes, and specifically asked if this would raise any alerts at the IRS or NYS tax dept or be reason for delays of refunds. His reply was no and no.

Originally Posted by darthbimmer
… what credit card benefit are you earning with significantly higher rate of return?
Perhaps I’m not correctly understanding this question but my answer is “meeting minimum spend(s) for SUB(s) that would otherwise be challenging to meet”. That’s the only reason I would use a credit card for tax payments. 1.87% of $15,000 ($270) for 172,770 MR on a new targeted NLL Biz Plat is “worth it” to me, even adding in the $695 AF.
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Dr Jabadski is offline  
Old Mar 6, 2023, 8:53 pm
  #717  
 
Join Date: Apr 2003
Location: Scottsdale AZ
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Yes, once 45 days from filing passes, the IRS calculates interest from April 15. You don’t get interest from estimated taxes paid in January, or July/ September the year before from date of payment to April 15.

I actually looked at the 1099 the IRS sent me for interest (it’s taxable) and ran the numbers. I am old school and still file my 1120s (S corp return) and 1040 on paper, this inevitably leads to processing delays vs electronic filing and results in interest.

Planning to use spend $3000 AMEX personal plat retention bonus, $900 for B of A Alaska, $1500 for Capital one to get $750, $5000 left on AMEX biz blue for 75,000 point welcome bonus, and $5000 left on AMEX biz plat for 150,000 welcome bonus. Between paying state taxes, quarter one estimated taxes and 2022 taxes should easily be doable.
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schistosomiasis is offline  
Old Mar 7, 2023, 1:59 pm
  #718  
 
Join Date: Mar 2007
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Originally Posted by Dr Jabadski
Perhaps I’m not correctly understanding this question but my answer is “meeting minimum spend(s) for SUB(s) that would otherwise be challenging to meet”. That’s the only reason I would use a credit card for tax payments. 1.87% of $15,000 ($270) for 172,770 MR on a new targeted NLL Biz Plat is “worth it” to me, even adding in the $695 AF.
The thrust of my question was about the time value of money. You're talking about paying a bill that's due now; satellite779 was talking about purposefully overpaying a bill to get a refund 12+ months from now. The math in these cases is different. The 12+ month early case has not only the 1.9% transaction cost to consider but also the 5%+ cost-- given the RoR available at zero risk in the market today-- of tying up a fair sum of money for 12+ months at zero interest.
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Old Mar 7, 2023, 2:10 pm
  #719  
 
Join Date: Apr 2015
Posts: 262
Originally Posted by darthbimmer
The thrust of my question was about the time value of money. You're talking about paying a bill that's due now; satellite779 was talking about purposefully overpaying a bill to get a refund 12+ months from now. The math in these cases is different. The 12+ month early case has not only the 1.9% transaction cost to consider but also the 5%+ cost-- given the RoR available at zero risk in the market today-- of tying up a fair sum of money for 12+ months at zero interest.
I was actually asking about overpaying taxes for last year before filing in March/April. It's still possible to pay taxes for last year and include that into one's return. I would get this money in a month or so if IRS doesn't audit the return. If they do, I get interest starting April 15th this year. So I won't give money to IRS for a year+ tax-free.
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satellite779 is offline  
Old Mar 8, 2023, 6:10 pm
  #720  
 
Join Date: Mar 2007
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Posts: 6,304
Originally Posted by satellite779
I was actually asking about overpaying taxes for last year before filing in March/April. It's still possible to pay taxes for last year and include that into one's return.
Where can you still make a payment for tax year 2022 before filing a return? I presumed earlier you were talking about quarterly estimated taxes. The last window for those closed Jan 17.
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