topic Re: Apply for and pay taxes with Sapphire Preferred? in Credit Cards

Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 04:57:27 GMT

I owe like almost 7k in taxes state + fed. Don't ask. I'm so dumb I didn't fill my W4 correctly so the gov didn't take out enough taxes from my paycheck. I was thinking to make myself and my wife apply for 1 Chase Sapphire Preferred each and use it to pay for the taxes and then pay it off in full and close when I get the miles. I could reach the 4k spending goal on both of them almost immidately. We already have a chase bank account (opened just for their bonus too) and a pair of Freedoms so I'm pretty sure we will be approved easy.

Is there anything I might be forgetting here? Will it work?

Re: Apply for and pay taxes with Sapphire Preferred?

Ghoshida — Tue, 09 Feb 2016 05:19:18 GMT

Remember that Chase is known to reject applications when you have got 5 or more new accounts in the last 2 years.

I have personally never paid taxes with a credit card. Others should chime in.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 05:27:38 GMT

Risky business, I wouldn't do it and it's unlikely you will receive any reward points if you followed through.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 05:38:16 GMT

@TastyWaves: What makes you say that? If OP isn't worried about his AAoA being affected, the inquiry, or doesn't have the 5/24 rule against him, I'd say it's a cool idea!

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 06:16:36 GMT

I only say it because some banks will not allow government debt payments or count them toward reward points. Im not given the option to pay my student loan payment with my CSP and it's from the dept. of education (government debt).

Furthermore OP is going off the assumption that he will get approved for a minimum of $7k which may be likely but not guaranteed.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 06:24:34 GMT

That's what I was afraid of actually. That there is some kind of strange rule about paying for certain things. Things that you are supposed to pay with your bank account and have a fee attached to it when paying with credit card. I guess I'm gonna call and ask them. I received a 10k Freedom from Chase while my wife got a 7k Freedom so if we get something around that again we should be fine. Actually we don't even need that much. I'm gonna spread the payoff anyway so they just need around 4-5k each. I think I'm not over the 5/24 rule although I will double check that.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 06:36:26 GMT

You are doing the right thing by calling and asking about the policy, better to know what to expect ahead of time.

Excellent question btw!

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 06:47:46 GMT

@Anonymous wrote:
I guess I'm gonna call and ask them.

Please let me know if taxes count. I, too, owe some taxes and was hoping to use the payment to meet the bonus requirement.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 06:50:31 GMT

What do you value UR points at? It's going to cost you 1.87% in fees to process the payment so really the points for general spend are gone.. or close to it.

You'd be opening just for the churn of the signup bonuses.. which is fine I guess.. but now you have two AF cards. Are you going to cancel them (likely hurt your future prospects with chase) or do you have spending pattern to keep one or both of them? Have other UR cards for transfer combo?

Not a terrible idea I guess but not a slam dunk either.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 08:28:31 GMT

@Anonymous wrote:
What do you value UR points at? It's going to cost you 1.87% in fees to process the payment so really the points for general spend are gone.. or close to it.

You'd be opening just for the churn of the signup bonuses.. which is fine I guess.. but now you have two AF cards. Are you going to cancel them (likely hurt your future prospects with chase) or do you have spending pattern to keep one or both of them? Have other UR cards for transfer combo?

Not a terrible idea I guess but not a slam dunk either.

I don't care about the general spend. I've never seen a travel card that has a good enough general spend reward program to beat normal cashback cards anyway. But the signup bonus looks really nice. Specially if you double it with my wife. I knew there was gonna be a fee. I didn't know its going to be exactly 1.87% but thats not bad. I was totally thinking of canceling them after that. I know its not nice but screw them. They own the world. They gave me 500 to open checking with savings, 200 for each freedom so they should get used to it by now lol. I dont know what UR cards are but I dont own any travel cards.

@Anonymous wrote:
Please let me know if taxes count. I, too, owe some taxes and was hoping to use the payment to meet the bonus requirement.

I'm gonna let you guys know what they said.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 09:38:54 GMT

I have never actually paid taxes with a credit card, but I am aware that there are third party payment processors that will take something along the lines of a 1.87% for credit card pay. Regardless of the route you take, there will be a fee for paying taxes with a credit card, but it is also likely that you will get the points because these would be classified as some "service" and not IRS or GOV payment per se.

Just my 5 cents OP. Look into that and I hope it works out for you.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 11:40:41 GMT

I owed some back taxes and I put them on a credit card (one of my capital one cards). I lost .37% or so but I was able to park it for a few months at 0% so it was a better deal than government interest and penalties accruing.

Not sure on Chase but with Cap1 it is possible, no questions asked, I got my points just like normal.

Re: Apply for and pay taxes with Sapphire Preferred?

takeshi74 — Tue, 09 Feb 2016 14:50:37 GMT

@Anonymous wrote:
I don't care about the general spend. I've never seen a travel card that has a good enough general spend reward program to beat normal cashback cards anyway. But the signup bonus looks really nice.

In addition to the fee make sure you're consider redemptions with any program like UR, MR, TY, etc. Don't just look at the bonus. The specific method you can use will have an impact on reward value with such programs. If you opt for cash back it's only $0.01/UR point. Better value is generally attainted by transferring to travel partners.

@Anonymous wrote:
We already have a chase bank account (opened just for their bonus too) and a pair of Freedoms so I'm pretty sure we will be approved easy.

Don't assume. Your deposit account does not matter. Freeom has different underwriting criteria and your credit probably isn't the same as when you were approved for the Freedom anyway.

@Anonymous wrote:
I dont know what UR cards are but I dont own any travel cards.

Any card that accrues UR points on spend such as the CSP, Freedom, Ink Cash, Ink Plus, etc.

You don't own cards. You are just authorized to use them.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 15:50:59 GMT

I see absolutely zero reason why the transaction wouldn't count against minimum spend. It's money being spent, it's not a Chase fee.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 15:58:19 GMT

If Chase does allow you to do it, ti's still a bad idea. I read an article from I believe the Washington Post that advised against putting taxes on a credit card for a number fo reasons. Several examples were given, but one person paid a similar amount of taxes on a credit card to the amount you are considering, in hopes of getting the bonus and meeting spend - after the fees charged, that person netted an entire $6. Six dollars.

Using a card only to acquire the bonus and then closing it down won't put you in a very good place on Chase's radar screen, in addition. Just some things to consider.

Re: Apply for and pay taxes with Sapphire Preferred?

mccallb — Tue, 09 Feb 2016 15:56:48 GMT

I always pay my taxes with credit cards!

I in fact just opened a Barclay Card Arrival Plus to pay this years taxes.

I've paid installment-taxes with my quicksilver through pay1040.com for a while as well.

It works great!

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 16:17:34 GMT

Ditto-

If you don't have the cash and need a few weeks to pay it off, taking a small loss on rewards is better than...being late on your taxes. C'mon.

Re: Apply for and pay taxes with Sapphire Preferred?

mccallb — Tue, 09 Feb 2016 16:21:35 GMT

I just got the barclaycard arrival plus which gives 2x points per dollar spend, plus the 40K signup bonus at 3K spend. I'll get 50+K bonus points for paying my taxes. That's actually a very healthy net over the "fee" for paying the taxes. It has nothing to do with my needing a few weeks to pay it.

Re: Apply for and pay taxes with Sapphire Preferred?

Anonymous — Tue, 09 Feb 2016 16:27:13 GMT

I wasn't speaking for you. I was speaking for me.

Re: Apply for and pay taxes with Sapphire Preferred?

mccallb — Tue, 09 Feb 2016 16:30:20 GMT

haha fair enough