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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.
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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:
| PayUSAtax | Pay1040 | OfficialPayments |
| Debit Fee: $2.55 | Debit Fee: $2.58 | Debit Fee: $2.00 or $3.95* |
| Credit Fee: 1.96% Minimum $2.69 | Credit Fee: 1.87% Minimum $2.59 | Credit Fee: 1.99% Minimum $2.50 |
*$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:
| DIGITAL WALLET | PAYUSATAX | PAY1040 | OFFICIALPAYMENTS |
| Visa Checkout | x | x | x |
| American Express Checkout | x | x | x |
| MasterPass | x | x | |
| Android Pay | x | ||
| Samsung Pay | x | ||
| PayPal | 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
INK BUSINESS UNLIMITED® CREDIT CARD
The Ink Business Unlimited® Credit Card from Chase offers a $750 bonus (75,000 Ultimate Rewards points) when you spend $7,500 within the first 3 months of account opening. This card has no annual fee.
Get unlimited flat 1.5% Cash Back rewards on every purchase with this card. There are no categories to keep up with.
Redeem rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards. You can pool your rewards with other Ultimate Rewards Cards (e.g. Chase Sapphire Preferred® Card, Chase Sapphire Reserve®, Ink Business Preferred® Credit Card). Pair it with one of these cards, use the available transfer partners, and 750k Ultimate Rewards points can be worth up to $1,500 in value.
THE BUSINESS PLATINUM CARD® FROM AMERICAN EXPRESS
Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
The Business Platinum Card® from American Express has a welcome offer for 120,000 Membership Rewards points after you spend $15,000 on qualifying purchases within your first 3 months of Card Membership. We value 120k points to be worth around $2,400.
This card earns 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel. Also earn 1.5X Membership Rewards® points on eligible purchases in key business categories, as well as on purchases of $5,000 or more everywhere else. Cap applies.
Use Membership Rewards Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 35% of the points back, up to 500,000 bonus points per calendar year. Also, get up to $200 in statement credits per calendar year toward baggage fees and more at one qualifying airline. You will also get up to $179 back per year on your CLEAR® membership when you use your Card.
This is a premium business card with a $595 annual fee ($695 if application is received on or after 1/13/2022). See Rates & Fees, Terms Apply.
THE BLUE BUSINESS® PLUS CREDIT CARD FROM AMERICAN EXPRESS
Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
The Blue Business® Plus Credit Card from American Express offers 15,000 Membership Rewards points after you spend $3,000 in eligible purchases within 3 months of Card Membership. Membership Rewards are some of the most valuable points for credit cards. We value each point to be worth up to 2 cents.
The card earns 2 points per $1 on everyday business purchases like office supplies and client dinners, for up to the first $50,000 in purchases per year. After that, all purchases will earn 1 point per $1.
This card features Expanded Buying Power, allowing you the freedom to spend beyond your credit limit at no extra cost. Your credit limit is not set to a constant amount but rather, it adjusts with your card use.
The Amex card has no annual fee (See Rates & Fees, Terms Apply).
CAPITAL ONE SPARK CASH FOR BUSINESS
The Capital One Spark Cash for Business card is offering a one-time $500 cash bonus once you spend $4,500 on purchases within 3 months from account opening.
The card earns unlimited 2% cash back on all purchases. The annual fee is waived for the first year and $95 after that. There are no foreign transaction fees with this card.
Bottom Line
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.
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Disclaimer: These responses are not provided or commissioned by the bank advertiser, credit card issuer, hotel, airline or other entity. Responses have not been reviewed, approved or otherwise endorsed by any of the entities included within the post. It is not the bank advertiser's or any other entity's responsibility to ensure all posts and/or questions are answered.