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- Paying Taxes With Your Credit Card
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April 15th. We all know that day as the deadline for tax payments. But if you’re a freelancer or self-employed, you’ll have to make estimated tax payments every three months, with the last payment due on January 15th.
See our best credit card bonuses here.
If you’re playing around with credit card rewards, you might want to consider charging your taxes so you can earn points, miles or cash back. But there’s also a cost for using your credit card. In this guide, we’ll cover the pros and cons of paying your taxes with your credit card.
Choose Which Way To Pay Your Taxes
There are several ways to make tax payments to the federal government, including checks by mail and via debit or credit card. The IRS authorizes three different companies to process debit and credit card payments:
|Debit Fee: $2.55||Debit Fee: $2.58||Debit Fee: $2.00 or $3.95*|
|Credit Fee: 1.96%|
|Credit Fee: 1.87%|
|Credit Fee: 1.99%|
*$3.95 flat fee for payments over $1,000.
Paying By Check
Mailing a check to the IRS is the least expensive way to pay your taxes. There’s no “convenience” fee, and the only cost to you is the envelope and stamp.
Paying By Debit Card
Paying your taxes with a debit card involves a flat convenience fee between $2 to $3.95, depending on which payment processor you choose and whether your tax payment is over $1,000. This is an inexpensive way to pay your taxes because your fee will always be less than $4.
Paying By Credit Card
Using a credit card to pay your taxes comes with a convenience fee, which is a percentage of the tax amount. These fees are between 1.87% to 1.99%.
Besides credit cards, all three processors also now accept digital wallet payments:
|American Express Checkout||x||x||x|
Why You Should Pay Taxes With Your Credit Card
Although using your credit card is the most expensive way to pay taxes, it does come with a few advantages:
- You’ll earn rewards on your tax payments, just like any other charge to your rewards card. With the right card, the value of the points, miles or cash back you earn on your tax payment will more than cover the cost of the processing fee.
- Charging your tax payment to your credit card could bring the sign-up bonus within reach. The same goes for unlocking any card benefit that requires a spending threshold.
- Use a credit card with interest-free financing on new purchases, and you’ll be able to pay off your taxes over time, without interest.
Why You Shouldn’t Pay Taxes With Your Credit Card
We don’t recommend financing a tax payment using your credit card if your interest rate is high. As a rule of thumb, if you can’t pay your statement balance in full, don’t charge taxes to your credit card (unless you have a zero-interest introductory rate).
Instead, talk to your accountant or tax advisor and go over your options. There’s a possibility the IRS will let you make a payment plan with lower interest than most credit cards.
Best Credit Cards For Tax Payments
|CREDIT CARD||EARNING RATE||POTENTIAL RETURN|
|The Blue Business® Plus Credit Card from American Express||2x points||4%|
|American Express EveryDay Credit Card||1x points||3%|
|The Business Platinum Card® from American Express||1x points||3%|
|Chase Freedom Unlimited®||1.5% cash back||3%|
|Ink Business Unlimited® Credit Card||1.5% cash back||3%|
|Discover it Miles Card||1.5x miles||3%|
|Alliant Visa||2.5% cash back||3%|
|Capital One® Venture® Rewards Credit Card||2x miles||2.8%|
|Capital One Spark Cash for Business||2x miles||2.8%|
The Best Among Those Credit Cards
Should you make your tax payment with a credit card? That entirely depends on you. If your rewards supersede the convenience fee, if you can pay your balance in full, or if you have a 0% intro APR card, then charging your tax payment could very well be a good idea.
|OFFER LINK||OFFER||OUR REVIEW|
|Chase Business Complete Banking℠||$300 Cash||Review|
|Chase Total Checking®||$200 Cash||Review|
|Bank of America Checking||$100 Offer||Review|
|TD Bank Beyond Checking||$300 Cash||Review|
|TD Bank Convenience Checking℠||$150 Cash||Review|
|HSBC Premier Checking||$450 Cash||Review|
|HSBC Premier Checking||Up To $600||Review|
|HSBC Advance Checking||$200 Cash||Review|
|HSBC Advance Checking||Up To $240||Review|
|Aspiration Checking||$100 Cash||Review|
|Ally Invest||Up To $3,500||Review|
|Betterment||Up To 1 Year Free||Review|
|BlockFi||Up To $250 BTC||Review|