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When you pay taxes using a credit card, there’s no way to waive the credit card’s transaction fees. However, with some creative ways, you can pay taxes and earn many credit card rewards, free nights, elite status with hotels/airlines, and more that can potentially offset those credit card payment fees.
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Photo Credit: IRS |
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Good To Know
- Do not cycle through your credit card limits. If you do not have enough credit lines to cover what you owe in IRS taxes, consider paying your tax with multiple credit cards. Do NOT pay tax with a credit card, then pay off the balance quickly and repeat. Banks do not like that.
- There are no cash advance fees when you pay IRS tax using a credit card.
- When you pay IRS tax with a credit card, you do not need to send in the IRS payment voucher.
- Credit card fees are tax-deductible for business taxes, but individual or personal taxes are not eligible.
- If you overpay, IRS will refund any overpayment.
- If you need to cancel any card payment, you must contact the card processor directly, not IRS.
What is the fee for paying taxes with a credit card?
- Pay1040 charges 1.87% with a minimum fee of $2.50.
- payUSAtax charges 1.96% with a minimum fee of $2.69.
- ACI Payments, Inc. charges 1.98% with a minimum fee of $2.50.
What is the fee for paying taxes with a debit card?
- ACI Payments, Inc. charges a $2.20 flat fee.
- Pay1040 charges a $2.50 flat fee for consumer or personal debit cards and 1.87% for other debit cards with a minimum fee of $2.50.
- payUSAtax charges a $2.55 flat fee.
Maximizing Paying Taxes With Credit Cards
Credit Card Fees Are Tax-Deductible For Business
Meet the Minimum Spending Requirement For Credit Card’s Signup Bonus
- 150 Capital One Miles on the credit card $75 fee (Venture X card earns 2 miles per dollar spent).
- 8,000 Capital One Miles on the $4,000 tax bill (Venture X card earns 2 miles per dollar spent).
- 75,000 signup bonus Capital One Miles.
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Meet the Minimum Spending Requirements For Brex Account’s Signup Bonus
Earn Bonus Miles & Points
- It would cost you about a $75 credit card transaction fee to pay your total IRS tax with a credit card.
- You earn 1% cashback on your $4,075 tax payment: $40 + $0.75 = $40.75
- Your net value is you lose about $35 instead of $75, and that is a terrible deal to go through all these inconveniences just for that much.
- You will earn 2% back on your payments: $80 + $1.50 = $81.50
- Your return value comes slightly above the $75 fee you paid out, but you can convert that $81.50 into 8,150 Citi ThankYou (TY) points with the Citi Premier Credit Card to get better values than $81.50 when transferring to loyalty programs.
- Hyatt currently has a targeted offer: Earn 5,000 bonus points if you spend $3,000.
- Check if your Chase card is targeted for any bonus spent here.
- For $2000 more, you earn two (2) qualifying elite nights (more below).
- There are credit cards that earn the quarterly 5% bonus in a specific category, such as the PayPal category. You can pay your tax using PayPal through payUSAtax, which accepts PayPal as a payment method, and earn a 5% return with your eligible credit card, such as the Chase Freedom Flex Credit Card.
Earn Hotel Elite Status or Hotel Free Nights
- Chase World of Hyatt Credit Card
- Earn two (2) qualifying elite night credits after each $5,000 spent.
- Earn Hyatt Category 1-4 Free Night Award after $15,000 spent in a calendar year.
- Chase World of Hyatt Business Credit Card
- Earn five (5) qualifying elite night credits after $10,000 spent in a calendar year.
- Chase Marriott Bonvoy Boundless Credit Card
- Earn one (1) elite night credit for each $5,000 spent on the card.
- American Express Hilton Honors Business Card
- Earn a Hilton Free Weekend Night Reward after $15,000 spent in a calendar year.
- American Express Hilton Honors Surpass Card
- Earn a Hilton Free Weekend Night Reward after $15,000 spent in a calendar year.
- Check out more Hotels Credit Cards Reviews.
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Earn Airlines Elite Status
- Alaska Airlines targets select cardmembers of Alaska Airlines Credit Card with the opportunity to earn 1,000 elite qualifying miles for every $5,000 spent through December 31, 2022.
- Delta SkyMiles Credit Cards allow you to earn Medallion Qualifying Miles (MQMs) through spending. One example is American Express Delta SkyMiles Reserve Card, which allows you to earn 15,000 Medallion Qualification Miles (MQMs) after you spend $30,000 in purchases on your card in a calendar year, up to four times for Delta’s elite status boost.
- American Airlines allows you to earn Loyalty Points towards the elite status level when you use any American Airlines Credit Cards. You earn 1 Loyalty Point per dollar spent, and remember, this goes with the loyalty point earned, not AA miles earned.
- Check out more Airlines Credit Cards Reviews.