Should I pay my 2020 taxes with the credit cards ?

[ChargedUp]

I just paid $2K in taxes on my 2% Blue Business Cash with pay1040.com. It's essentially a wash, but I'm still on 0% interest through January so I don't have to throw $2K in cash at it right away.

[wasCB14]

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@ChargedUp wrote:

I just paid $2K in taxes on my 2% Blue Business Cash with pay1040.com. It's essentially a wash, but I'm still on 0% interest through January so I don't have to throw $2K in cash at it right away.

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Net cash back plus extra time to pay is always a win!

My only 0% promo that's good for more than a few months is BofA WWFCR. That's 1.75% cash plus 0% for IIRC another 11 months...or borrowing at about 0.1% after adjusting for the fee.

No 0% for me on BBP, but it is a little simpler to keep track of payments when I put them on one card vs. several. I nearly forgot about the estimated payment I made when I upgraded BCE to BCP.

[MrT_521]

I dont' really have anything to add that hasn't already been said, but I'll relate my experience. Because of my family size and income, I never owe taxes. I always get a refund, most of it coming from refundable child tax credits. However, this year I paid taxes anyway because of SUBs. I ended up using it to meet MSR on 3 different credit cards. The IRS refunds whatever is overpaid in taxes, which applied to all of the roughly $10K I paid.

The last card I did it with was SDFCU Premium Cash Back+. In general, if you don't get at least 2% cash back, the only reason you should pay taxes with a credit card is to qualify for a SUB. But the Cash Back+ is 2% cash back, which is more than the 1.87% fee. With the first two cards, I only paid what was necessary to meet the MSR, but with this one, I paid a good bit extra. Part of the reason was because I actually make a bit of profit on the cash back alone, and the other reason is that it seems to me that spending only the exact amount required for the SUB might appear to the credit card company as MS.

[randomguy1]

People often pay for taxes with the AMEX Biz Plat to meet the MSR.

Earn 75,000 Membership Rewards® points after you spend $15,000 all on qualifying purchases on the Business Platinum Card within the first 3 months of Card Membership.†

1.5x earnings.

1 MR value = $2?

If you can get lucky with a public offering for a 100k Plat offer that would make this deal even more lucrative.

[SouthJamaica]

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@Anonymous wrote:

Hello Community!

I have to pay 8 k in Federal taxes and $200 in State Taxes. My CPA suggested to pay the amounts with credit cards and earn points or rewards.

I do have cash to pay them but I am thinking about the pros and cons of paying with the credit cards.

I do have 4 credit cards (2 BOA rewards cards ,1 American Express Blue,1 Wells fargo) and my utilization is 6 %  and credit score is 780 from Equifax(checked today) and it has been almost 4 years since I opened any new accounts and I am thinking of opening 2 new credit cards to pay the 8k. 4 k on each card to maximize the rewards or points. 

Could you guys, let me know if this is a good idea or not ? if it is then what cards should I open to maximize the points. I am leaning more towards bonous points or cash to spend it on Air Travel.

Thanks much!

Stewie

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IMHO it's more important to keep your credit scores high than to pick up a signup bonus. So my advice would be to forget it, and just pay the bill. Why bother with an inquiry, resetting your age of newest account, and lowering your average age of accounts, when you don't need to?

[K-in-Boston]

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@randomguy1 wrote:

People often pay for taxes with the AMEX Biz Plat to meet the MSR.

Earn 75,000 Membership Rewards® points after you spend $15,000 all on qualifying purchases on the Business Platinum Card within the first 3 months of Card Membership.†

1.5x earnings.

1 MR value = $2?

If you can get lucky with cardmatch.com for a 100k Plat offer that would make this deal even more lucrative.

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270,566 * $2 = $541,132  

Either you are missing some decimal points or I am doing this points game totally wrong.

For Business Platinum, they also have public 100k offerings from time to time.  I actually just missed out on it for mine (I didn't want to divert a majority of spending to hit the $25k spend in 90 days and would have missed the window when I knew I had big non-category charges coming up), but went for it when it came down to 85k for $20k spend.

Back on the subject, definitely agree that paying taxes with a credit card is a great idea if the rewards outweigh the very reasonable fees, especially if a SUB is involved.

[randomguy1]

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@K-in-Boston wrote:

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@randomguy1 wrote:

People often pay for taxes with the AMEX Biz Plat to meet the MSR.

Earn 75,000 Membership Rewards® points after you spend $15,000 all on qualifying purchases on the Business Platinum Card within the first 3 months of Card Membership.†

1.5x earnings.

1 MR value = $2?

If you can get lucky with cardmatch.com for a 100k Plat offer that would make this deal even more lucrative.

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270,566 * $2 = $541,132  

Either you are missing some decimal points or I am doing this points game totally wrong.

For Business Platinum, they also have public 100k offerings from time to time.  I actually just missed out on it for mine (I didn't want to divert a majority of spending to hit the $25k spend in 90 days and would have missed the window when I knew I had big non-category charges coming up), but went for it when it came down to 85k for $20k spend.

Back on the subject, definitely agree that paying taxes with a credit card is a great idea if the rewards outweigh the very reasonable fees, especially if a SUB is involved.

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oops 2cents per point. #alexastartespressomachine

[Anonymous]

If you plan to get a card anyway, I would do it (and recently have done it with my new card). If your scores can handle it, maxing out a card to do so is worth it (points + time (which is money)) probably > fee. Even at a break even, I'd still do it (its card usage).

If your scores can't handle it and today is March or April 2020, and you never paid taxes on an existing card and wanted to do so, I'd say don't do it. But that's not the case here.

With a decent profile, I'd say go for it.

[Anonymous]

For high dollar tax payments, is there anything I can do preemptively to prevent the payment from being declined by my credit card issuer?  For example, should I call the cc issuer in advance to let them know of the transaction?   I don't want to waste my time if it isn't going to help.

Because the fee and the payment are charged separately, I don't want to be in the situation where the fee gets processed but not the tax payment.

[FinStar]

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@Anonymous wrote:

For high dollar tax payments, is there anything I can do preemptively to prevent the payment from being declined by my credit card issuer?  For example, should I call the cc issuer in advance to let them know of the transaction?   I don't want to waste my time if it isn't going to help.

Because the fee and the payment are charged separately, I don't want to be in the situation where the fee gets processed but not the tax payment.

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Granted this is an older thread but to answer your question, the fee is only processed if the full payment is authorized.

If you feel this transaction is atypical from your ordinary spend on the card, a quick call, online chat or site update (depending on who the lender is), should work to provide a "heads up" so the transaction isn't declined.