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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 Apr 13, 2023, 6:02 am
  #751  
 
Join Date: Feb 2016
Location: New York
Programs: Navy A-4 Skyhawk, B727 FE/FO, S80 FO, B757/767 FO, B737 CA
Posts: 1,351
I've tried to use payUSAtax.com twice now to pay my estimated taxes and both times I was told that the card I wanted to use wasn't accepted and to use another card. I was trying with an Alaska Air Visa card and the Visa logo is on the site. pay1040.com does work. Anyone else having an issue with them?
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Old Apr 13, 2023, 10:10 am
  #752  
 
Join Date: Aug 2012
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Originally Posted by fredc84
I've tried to use payUSAtax.com twice now to pay my estimated taxes and both times I was told that the card I wanted to use wasn't accepted and to use another card. I was trying with an Alaska Air Visa card and the Visa logo is on the site. pay1040.com does work. Anyone else having an issue with them?
Paid 1Q 2023 estimated taxes over the past few days. 3 payments with two different BOA Premier Rewards cards
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Old Apr 14, 2023, 9:51 am
  #753  
mia
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Originally Posted by fredc84
I....Alaska Air Visa card ....
Business card? Read here: Can't pay taxes with Chase INK?

Last edited by mia; Apr 14, 2023 at 9:56 am
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Old Apr 14, 2023, 10:15 am
  #754  
 
Join Date: Feb 2016
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Posts: 1,351
Originally Posted by mia
Business card? Read here: Can't pay taxes with Chase INK?
Yea, but that thread seems to conclude that it shouldn't be an issue, esp since I'm the primary cardholder. And I definitely used the sites when I was meeting my spend on the Ink Prem. And the problem is that one pay site doesn't work, but the other did. It's not that big a deal...0.02% difference in the fee. I've always used pay1040 in the past when their fee was lowest, and they still work. Just wondering if anyone else had the issue and if they fixed it.
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Old Apr 14, 2023, 11:38 am
  #755  
mia
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Originally Posted by fredc84
Yea, but that thread seems to conclude that it shouldn't be an issue, esp since I'm the primary cardholder.
I do not see that conclusion in the linked thread. I see that there is a workaround using PayPal.
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Old Apr 14, 2023, 1:41 pm
  #756  
 
Join Date: Feb 2016
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Originally Posted by mia
I do not see that conclusion in the linked thread. I see that there is a workaround using PayPal.
Oh yea, the last post on that thread was state taxes using an Ink. Still curious why pay1040 works but payUSAtax doesn't work with the same exact card and info. Next quarter we'll have at least one Aer Lingus card to use so I'll see what happens then...since it's spersonal card.
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Old Apr 14, 2023, 9:31 pm
  #757  
 
Join Date: Jan 2023
Posts: 34
Originally Posted by fredc84
Yes, at 5 years the penalty goes away...but that's not what I'm talking about. But the last three months' hit gets diluted the longer that the bonds are held. If the bonds are held 2 years, the effective rate goes up from 5.17% to around 6.3% (assuming the rate theoretically stayed the same). Think of it as if the first year was 9 months of interest which is why the hit looks so dramatic, but every subsequent year is a full 12 months, which dilutes the hit (on a percentage basis).
So I think we were expanding on different points, but yes the longer one keeps the bonds past the 1 year mark the penalty decreases and the effective rates goes up. But as you noted and currently released the variable rate has basically halved, so it's not as attractive an offer anymore, ie compared to when it was ~9% because it's more liquid and similarly profitable to just put it in a high yielding savings account. that's why most who were talking about keeping it only year was because the plan was for inflation to drop precipitously
https://tipswatch.com/2023/04/14/i-b...nt-buy-at-all/
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Old Apr 15, 2023, 8:26 am
  #758  
mia
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Moderator observation

Originally Posted by ctle
.... the plan was for inflation to drop precipitously
There is absolutely no assurance that this "plan" will succeed. If it does work MDtR-Chicago has pointed out that the interest rates on competing investments will also decline, and iBonds purchased now may still be attractive relative to other low risk investments over the next five years. In any event, this thread is about using credit cards to pay taxes, and the option to invest overpayments in iBonds is just a passing observation. We need to return to the primary topic.
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Old Apr 15, 2023, 7:04 pm
  #759  
 
Join Date: Apr 2023
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First time tax filer.

Hi, I tried searching for this but could not find anything definitive. Can a first time tax filer use pay1040 / ACI to pay taxes? I ask because I can not pay with IRS direct pay since it asks for prior year tax info for identity verification. Since I have no prior year taxes I cant verify myself for direct pay (to pay with a bank account). For Pay1040 it says IRS will validate the payment against SSN, birthday, zip code on file. But I dont have anything on file (until I file this years tax). Looking for DPs to help figure out if I can pay via the 3 card payment providers. Thanks!
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Old Apr 16, 2023, 10:20 am
  #760  
 
Join Date: Feb 2011
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Originally Posted by Simonsayspoints
… Can a first time tax filer use pay1040 / ACI to pay taxes? … Thanks!
Awesome, a first time tax filer, presumably a young adult, thinking about points and miles and (reasonable) manufactured spend (paying taxes with a credit card). Another reason I want to be young again !!! You’ve made an excellent decision by joining FT, wish I had done it 10 years sooner. Great username although many of us go for the points even when Simon doesn't say .

Sorry, I cannot specifically answer your question. It’s been over 40 years since my first tax returns, paying with a credit card and points & miles didn't exist at that time. As per the Wiki at the top of page 1 of this thread, there are 3 “approved” providers for IRS credit card payments, maybe one of them will allow a first time filer to make a payment.

Welcome to FT (and taxes ) young grasshopper*, wishing you good luck and lots points and miles and enhanced travel experiences.

(* "Young Grasshopper– Where did it come from? What does it mean? I thought for sure that this phrase had come from the 1984 movie The Karate Kid, but I was wrong! It happens the phrase actually comes from a 1972-1975 television show called Kung Fu. Kwai Chang Caine was played by David Caradine who’s character often thought back to his earlier years training as a Shaolin Monk in Asia. It was during this training that his blind Chinese master would say ‘Patience Young Grasshopper.’”)
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Old Apr 18, 2023, 11:34 am
  #761  
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TODAY IS TAX DAY!

DON'T FORGET TO MAKE YOUR PAYMENTS!

I love being self-employed and paying all of my taxes on CC's every year for massive SUBs.
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Old Apr 29, 2023, 9:30 am
  #762  
nsx
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Do tax payments trigger the 2.5 points per dollar on Chase Ink Premier (for purchases over $5k)?
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Old Apr 29, 2023, 5:39 pm
  #763  
mia
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Originally Posted by nsx
Do tax payments trigger the 2.5 points per dollar on Chase Ink Premier (for purchases over $5k)?
THIS post suggests yes.
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Old Jun 3, 2023, 1:00 pm
  #764  
 
Join Date: Nov 2011
Posts: 150
Originally Posted by Zorak
You receive a 1099 when other entities report payments that they made to you.



You shouldn't need to _prove_ anything to your preparer, but you do need to let them know about all the payments you made (don't know about yours but the ones I've engaged have all had a clause along the lines of, we prepare your tax returns based on the info you give us and you're responsible for the accuracy of the information).

You might later need to be able to prove to the IRS that you made a payment when you say you did, but generally as satellite779 said provided that you entered your info correctly then there shouldn't be any problems. However if your return says you paid $20,000 then that is what the IRS will base your refund on (or amount owed etc.) even if you actually paid $25,000.

I typically print out the post-payment confirmation screen to PDF in case I ever need to produce it in the future, but if you forgot to do that at the time, the email receipt from pay1040 notes that 'If you would like a paper receipt, please visit www.pay1040.com and select the Payment Verification option located under Taxpayer Tools at the top of the page." for which the direct link is: https://www.pay1040.com/#/request-verification

This is great info thank you. Would the payment fees we paid for using these payment providers be added to deductible tax preparation fees line item in our taxes? I presume the 1099 I will get will have these fees listed.

But the issue I see for me is, these fees I paid about two months ago in present year 2023 were incurred in 2023 1 day before I filed my 2023 return to overpay my 2023 tax return (for 2022) .

Would i be in need of filing a amended 2023 return to itemize these fee expenses (not really worth my time)

or since my fees were incurred in 2023 is what matters, and thus i can itemize them in my upcoming 2024 return (for tax year 2023).
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Old Jun 3, 2023, 1:14 pm
  #765  
 
Join Date: Nov 2011
Posts: 150
Originally Posted by satellite779
Paying for 2022 in March/April 2023 is totally fine. This is not estimated quarterly taxes but year end taxes. Don't apply them to 2023 as you will wait 1 year to get the money back. Interest rates are 5% so you would lose $350 on the $7k that would otherwise earn interest. Make sure he applies them for 2022.

Create an account on IRS.gov and check if your payment was actually applied to 2022.
Agree. I tried to speak to someone at the payment processor but i was onhold for a long while and gave up.

I also went halfwy with creating a account on irs.gov but the creation process did not go smooth, and they needed photo id which i proceeded to upload, then they wanted a video call, thats when i did some research and realized irs was using a 3rd party to do all this ID checking so I walked away from this after wasting my time and having uploaded my ID. i had googled the 3rd party and did not like what i read.


Just to update my situation, by the month of may, i was sort of content with waiting until next year loaning it to the Fed until my next filing.

Today I got unexpectedly, a letter in the mail from the Treasury with the 7K back to me..... with interest.


So in my experience, no amended return was necessary. about 5 weeks after getting my refund i get a check for the overage.
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