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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:
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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 8, 2024, 6:20 pm
  #811  
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When I did this a few years ago, it was the latter, with the estimated tax payment credited to the named spouse. This makes no difference when filing jointly.
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Old Jan 8, 2024, 8:58 pm
  #812  
 
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Looks like you can get around that paying with PayPal
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Old Jan 8, 2024, 9:00 pm
  #813  
 
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Originally Posted by Ragnarok
When you say more than 70K taxes owed do you mean just from Q4 2023?
US taxes are pay-as-you-go. The IRS charges interest & penalty if you under withheld (or did not remit sufficient estimated tax payment each quarter).
Do not skip paying earlier in the year and wait until April to pay just for the sake of credit card rewards.

(Paying estimated taxes quarterly via credit card instead of withholding is a totally fine strategy if you have the math right).

​​​​​​​Yes, but also no. Look up IRS safe harbor rule, but basically the max you need to withhold is 110% * last year's total tax. Anything above that you don't need to pay until April 15 and won't get charged penalties
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Old Jan 8, 2024, 9:18 pm
  #814  
 
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Originally Posted by kevinwangjk
Looks like you can get around that paying with PayPal
What can you get around? Do you mean the question about unmatched billing address?
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Old Jan 9, 2024, 12:57 am
  #815  
 
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Originally Posted by rrgg
What can you get around? Do you mean the question about unmatched billing address?
Forgot to quote, someone above asked about not able to pay tax bill using INK business cards
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Old Jan 9, 2024, 4:57 am
  #816  
 
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Originally Posted by Roka
Will the IRS web site show the payments as being transferred over from the spouse’s account to the primary tax filers? Or will they show separately per spouse but then you can just aggregate together on your tax return?
Correct what SPNLifer said. You can confirm the payments in each spouse's IRS account and then just combine the payments on your return.
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Old Jan 11, 2024, 10:19 pm
  #817  
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Originally Posted by kevinwangjk
Yes, but also no. Look up IRS safe harbor rule, but basically the max you need to withhold is 110% * last year's total tax. Anything above that you don't need to pay until April 15 and won't get charged penalties
Just to clarify: the safe harbor rule applies to withholding and timely estimated tax payments. In other words, you can't pay all 100% (or 110% for higher incomes) as a single estimated payment at the end of the year. You have to divide it equally throughout the year.

You can verify this by looking at Part III of Form 2210. You'll see that each quarter requires 25% of the required payment calculated on the first page, based on the safe harbor rules.

Also note that individual states have their own rules. For example, there is no safe harbor in California above a certain income threshold. And estimated tax payments are not evenly divided throughout the year.

I bring all this up to remind everyone to check their own circumstances carefully, in order to avoid penalties. It's not necessarily worth the points if you aren't certain the payments are correct.
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Old Jan 11, 2024, 10:28 pm
  #818  
 
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Originally Posted by MDtR-Chicago
Just to clarify: the safe harbor rule applies to withholding and timely estimated tax payments. In other words, you can't pay all 100% (or 110% for higher incomes) as a single estimated payment at the end of the year. You have to divide it equally throughout the year.

You can verify this by looking at Part III of Form 2210. You'll see that each quarter requires 25% of the required payment calculated on the first page, based on the safe harbor rules.

Also note that individual states have their own rules. For example, there is no safe harbor in California above a certain income threshold. And estimated tax payments are not evenly divided throughout the year.

I bring all this up to remind everyone to check their own circumstances carefully, in order to avoid penalties. It's not necessarily worth the points if you aren't certain the payments are correct.
Yes, and absolutely consult your own CPA / don't take tax advices here.

However, one addition to what you said is that taxes withheld from w-2s are considered evenly paid throughout the year, even if you backload it and pay more later in the year. So one trick some people use is to withhold less earlier in the year, and add additional holdings later, so that the total amount add up to the safe harbor rule. This only applies to w-2 salary, not other income like investment income
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Old Jan 12, 2024, 11:31 am
  #819  
 
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Originally Posted by kevinwangjk
Yes, and absolutely consult your own CPA / don't take tax advices here.

However, one addition to what you said is that taxes withheld from w-2s are considered evenly paid throughout the year, even if you backload it and pay more later in the year. So one trick some people use is to withhold less earlier in the year, and add additional holdings later, so that the total amount add up to the safe harbor rule. This only applies to w-2 salary, not other income like investment income
Actually it applies to any kind of withholding, not just salary.
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Old Jan 12, 2024, 11:42 am
  #820  
 
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Originally Posted by MDtR-Chicago
Just to clarify: the safe harbor rule applies to withholding and timely estimated tax payments. In other words, you can't pay all 100% (or 110% for higher incomes) as a single estimated payment at the end of the year. You have to divide it equally throughout the year.
There is an exception if you have unequal income throughout the year. E.g. a very large Roth conversion at the end of the year doesn't require you to prepay the extra tax on the conversion earlier in the year - you just have to pay the extra taxes in the quarter where the Roth conversion happened. If you do find yourself in that situation it will generate additional paperwork where you have to explain the unequal income in painful detail on form 2210 in the Annualized Income section . And if you were unlucky like I was the IRS will just ignore the paperwork and charge you a penalty anyway and then you have to follow up to find out why they ignored it. This was eventually corrected and the penalty reversed after a lot of painful follow up. Word of advice, never file taxes on paper because they can "forget" to do the data entry on part of it. Instead use the free fillable forms option to submit the paperwork online.
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Old Jan 15, 2024, 10:56 pm
  #821  
 
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This post might be not be in the right place. But doesn't anyone know when credit card payment for 2024 tax year will become available; right now the option is only for 2023 estimated. Want to use estimated to hit min spend due in Feb. Thanks.
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Old Jan 15, 2024, 11:34 pm
  #822  
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Originally Posted by gsxsilver
This post might be not be in the right place. But doesn't anyone know when credit card payment for 2024 tax year will become available; right now the option is only for 2023 estimated. Want to use estimated to hit min spend due in Feb. Thanks.

I don’t know if all payment processors use the same dates, but…

https://www.payusatax.com/IRS/Home/L...pageName=FAQ#5

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Old Jan 18, 2024, 3:07 pm
  #823  
 
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A little confused about payusatax.com's FAQ with deadlines for estimated tax payments. They have the following on their website:

1040-ES Estimated Taxes - Tax year 2023: 01/01/24 at 9am ET through 02/01/24 at 7am ET.

The IRS website says the deadline for estimated taxes for Q4 2023 is January 16, so how come the above says you have until 2/1/2024? I want to overpay for a large MSR now but wondering if it's too late for the 2023 taxes filing overpayment.
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Old Jan 18, 2024, 3:19 pm
  #824  
 
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Originally Posted by ccueto36
A little confused about payusatax.com's FAQ with deadlines for estimated tax payments. They have the following on their website:

1040-ES Estimated Taxes - Tax year 2023: 01/01/24 at 9am ET through 02/01/24 at 7am ET.

The IRS website says the deadline for estimated taxes for Q4 2023 is January 16, so how come the above says you have until 2/1/2024? I want to overpay for a large MSR now but wondering if it's too late for the 2023 taxes filing overpayment.
You're already late in the eyes of the IRS for the Q4 2023 payment, but payusatax.com is giving you two more weeks till Feb 1st. You can still overpay via 1040 (not 1040-ES) even after Feb 1st.
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Old Jan 18, 2024, 3:31 pm
  #825  
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If your payment is a week late you will pay the IRS one week of interest
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