How to Meet Minimum Spending Requirements by Paying Your Taxes

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It’s almost tax time again!  April 18, 2016, is the IRS filing deadline this year.

While most of us hope for a refund, you can take the sting out of owing taxes by meeting the minimum spending requirements on your new credit cards.  Or hit a spending threshold to unlock bonus miles, points, or elite status!

How To Meet Minimum Spending Requirements By Paying Your Taxes

It Might Be Worth It to Get Big Travel With Small Money When You Unlock Elite Status Levels or Big Sign-Up Bonuses by Paying Your Taxes With a Credit Card

But because you’ll pay processing fees of 1.87% to ~2.25%, it’s generally NOT worth it except under specific circumstances.

I’ll show you how to pay your taxes with a credit card.  And when it might make sense for you!

How to Pay Taxes With a Credit Card

Link:   IRS-Approved Payment Processors

I’ve written about how to pay income taxes with a credit card, and if you’ll be charged a cash advance fee (you won’t!).

The IRS allows you to pay taxes with a credit card, but you must use an approved 3rd-party payment processor.  The government does NOT accept credit card payments directly.

How To Meet Minimum Spending Requirements By Paying Your Taxes

Pay1040.com, an IRS-Approved Payment Processor, Is the Best Choice for Credit Card Payments. You’ll Pay 1.87% to Use a Visa, MasterCard, AMEX, or Discover Card

These payment processors charge 1.87% to ~2.25% of your bill.

Here’s a list of approved IRS payment processors, and their fees:

Payment ProcessorCards AcceptedCredit Card FeeDebit Card Fee
Pay USA Tax Visa, MasterCard, American Express, Discover1.99% (Minimum Fee $2.69)$2.69
Official Payments Visa, MasterCard, American Express, Discover2.25% (Minimum Fee $2.50)$2.50
Pay 1040Visa, MasterCard, American Express, Discover1.87% (Minimum Fee $2.59)$2.59
Business Tax PaymentVisa, MasterCard, American Express, Discover1.87% (Minimum fee $2.59)$2.59

If you pay by debit card, you’ll be charged a flat fee of ~$3 to ~$4.

Which Payment Processor Should You Choose?

There isn’t an advantage to using 1 processor over another, except for reduced fees.

How To Meet Minimum Spending Requirements By Paying Your Taxes

Run the Numbers to Make Sure Paying the Fee Is Right For You. And Be Sure to Pay Your Balance Off at the End of the Billing Cycle to Avoid Paying Interest!

The least expensive for credit card payments is Pay 1040, which charges 1.87%.  And the cheapest option for debit card payments is a $2.50 fee through Official Payments.

For example, on a $5,000 tax payment at Pay 1040, you’d pay:

  • $5,093.50 with a credit card ($5,000 x 1.87% = $93.50)
  • $5,002.59 with a debit card ($5,000 + $2.59 flat fee)

You can check your fees with the Pay 1040 Fee Calculator.

Note:   Not all debit (or gift) cards are accepted.  In the past, some gift cards have worked, but I haven’t tried this year!

Note:  You will NOT be charged cash advance fees when you pay with a credit card.  The FAQs for all payment processors say:

Your tax payment will be treated like a retail purchase and not a cash advance.

That said, paying taxes with a credit card definitely does NOT make sense if you can’t pay your account off in full.  If you carry a balance, the interest you’ll pay will negate the value of the miles and points you’d earn.

When Does It Make Sense to Pay Taxes With a Credit Card?

Let’s look at a few examples where paying the fee could make sense.

1.   Meet Minimum Spending Requirements

Paying taxes with a credit card could make sense if you have a large minimum spending requirement to meet on a card.

For example, the Chase British Airways card has an offer to earn a total of 100,000 British Airways Avios points after meeting the tiered spending requirements. (EXPIRED.)

How To Meet Minimum Spending Requirements By Paying Your Taxes

You Can Use The Points You’ll Earn on the Chase British Airways Card to Take the Family to Hawaii!

It’s a terrific opportunity to earn a huge number of British Airways Avios points!  But to get the full bonus, you’ll have to spend:

  • $2,000 on purchases in the 1st 3 months of opening your account (earn 50,000 British Airways Avios points)
  • $10,000 (total) on purchases in the 1st 12 months of opening your account (earn an additional 25,000 British Airways Avios points)
  • $20,000 (total) on purchases in the 1st 12 months of opening your account (earn another25,000 British Airways Avios points)

That’s a lot of spending to earn the full bonus!  But depending on your travel goals, it might be worth it.

If you owe $10,000 in taxes and pay them via Pay 1040, you’d pay $187 in fees.  But you’d earn 75,000 British Airways Avios points!

That’s enough to fly 3 people round-trip from the West Coast to Hawaii in coach on American Airlines or Alaska Airlines.  While it’s no fun to owe that amount to the government, at least you’d get to unwind in Hawaii with the points you’d earn!

That said, if you can meet credit card spending requirements for free, this isn’t the best deal.  Because you’re basically paying for the convenience of getting the minimum spending done fairly easily in 1 transaction.

I’d only use this method if I had a lot of minimum spending to meet in a short amount of time.

Remember, there are lots of other (free or cheap) ways to meet minimum spending!

2.   Big Spending for Elite Status or Bonus Points

It might make sense to pay your tax bill with a credit card if it will put you over the spending threshold to earn elite status, elite qualifying miles, or bonus points.

How To Meet Minimum Spending Requirements By Paying Your Taxes

Delta Will Waive Their Cash Requirement to Earn Elite Status If You Spend $25,000+ on a Delta Credit Card in a Calendar Year

You can check out my Big Spender series for an overview of which cards offer perks for spending a lot (tens of thousands of dollars) per year.

Here are some of my favorite cards with big spending bonuses:

Card NameSpending RequirementBonusNotes
Gold Delta SkyMiles® Credit Card from American Express$25,000 per calendar yearMedallion Qualifying Dollars (MQD) requirement waived to earn elite status
American Express Platinum Delta Skymiles$25,000 per calendar yearMedallion Qualifying Dollars (MQD) requirement waived to earn elite status
American Express Delta Reserve$25,000 per calendar year




$30,000 per calendar year


$60,000 per calendar year
Medallion Qualifying Dollars (MQD) requirement waived to earn elite status

15,000 Medallion Qualifying Miles, 15,000 Bonus Miles

Another 15,000 Medallion Qualifying Miles, 15,000 Bonus Miles
American Express Hilton HHonors Surpass$40,000 per calendar yearHilton Diamond status until end of next calendar year
Starwood Preferred Guest® Credit Card from American Express$30,000 per calendar yearStarwood Gold status for 12 months
Bank of America Virgin Atlantic$15,000 per card anniversary year
$25,000 per card anniversary year
7,500 Virgin Atlantic points

7,500 Virgin Atlantic points
Bank of America Virgin America Premium Signature $10,0005,000 Virgin America status pointsMaximum 15,000 points per calendar year
Barclaycard Hawaiian Airlines$10,000 per card anniversary year5,000 Hawaiian Airlines miles
Chase British Airways$30,000 per calendar yearTravel Together Companion Ticket
Chase Fairmont$12,000 per card anniversary year1 free night at any Fairmont hotel
Chase Hyatt$20,000 per calendar year

$40,000 per calendar year
2 stay / 5 night credits toward Diamond status

3 stay / 5 night credits toward Diamond status
Marriott Rewards® Premier Credit Card$3,0001 elite creditNo limit to the number of elite credits you can earn
Chase Southwest Premier$10,0001,500 Tier Qualifying PointsMaximum 15,000 Tier Qualifying Points per year
Chase Ritz Carlton Rewards$10,000 per card anniversary year

$75,000 per card anniversary year
Maintain Gold Elite status after 1st year of having card

Platinum Elite status through December 31 of following year
Chase United MileagePlus Explorer$25,000 per calendar year10,000 bonus United Airlines miles
Citi Executive AAdvantage$40,000 per calendar year10,000 Elite Qualifying Miles (EQMs)
Citi Hilton HHonors Reserve$10,000 per card anniversary year

$40,000 per calendar year
1 free weekend night at almost any Hilton

Hilton Diamond Elite status until end of next calendar year

3.   2% Cash Back Cards Could Be (Almost!) Worth It

If you use a cash back card that pays more than 1.87%, you could earn a small profit by using a credit card to pay taxes.

For example, the Citi Double Cash card pays 1% cash back when you make a purchase, and another 1% when you pay it off.

How To Meet Minimum Spending Requirements By Paying Your Taxes

You’ll Only Earn a Few Bucks With a 2% Cash Back Card. But It Can Help Build Your Relationship With the Bank. Plus, It All Adds up!

So if your taxes are $5,000, you’d pay ~$94 in fees.  But you’d earn ~$102 cash back.  So you’d come out ahead by ~$8.

While you won’t make a lot of money using a cash back card to pay your taxes, it’s better than earning nothing by paying directly from your bank account.

And your card issuer will see lots of spending and on-time payment activity on your card, which builds your history with the bank.  And some banks (like Barclaycard) want to see you using their cards before they’ll issue you more credit!

When Is It NOT Worth Using a Credit Card to Earn Points When Paying Taxes?

It can make sense to pay taxes with a credit card when you:

  • Need a fast and convenient way to meet a minimum spending requirement for a big sign-up bonus
  • Want to meet a spending threshold to earn elite status, elite qualifying miles, or other big spender perks
  • Can earn more cash back than the fees you’ll pay with certain cash back cards

But using a card just to earn points does not always make sense.

Suppose you used the Chase Sapphire Preferred to pay your $5,000 tax bill.  You’d pay a total of $5,093.50 ($5,000 x 1.87% = $93.50) and earn 1 point per $1, or ~5,094 Chase Ultimate Rewards points.

You could convert those points to cash at a rate of 1 cent per point, so ~5,094 points is worth ~$51.  You won’t break even!

How To Meet Minimum Spending Requirements By Paying Your Taxes

You’ll Lose Money If You Get a Value of 1 Cent per Point Paying Taxes With a Credit Card

If you used those points to pay for travel through the Chase Ultimate Rewards travel portal, they’re worth 1.25 cents each.  So you’d get ~$64 worth of travel (5,094 points x 1.25 cents per point) from the transaction.  That’s still not a good deal.

You could potentially do better by transferring the points to travel partners like British Airways, IHG hotels, or Hyatt.  For example, 5,000 Chase Ultimate Rewards points transferred to these partners could get you:

Using our example of a $5,000 tax bill, it’s possible to get more than ~$94 in value from these redemptions (often last minute, short-haul flights can cost $200+).

But I wouldn’t do this unless I had a very specific use in mind for the points!

How Many Payments Can You Make?

In general, the IRS requires you pay your taxes with a maximum of 2 payments.

How To Meet Minimum Spending Requirements By Paying Your Taxes

Whether You Pay Taxes Yearly, Quarterly, or on a Monthly Installment Plan, You Can Make 2 Payments With 2 Different Cards

Taxes are complex and there are lots of different forms to keep track of.  But you can make 2 payments if your taxes are due yearly, quarterly, or monthly with an installment plan.  Here’s a reference for the various types of payments.

Depending on how much you owe, you could meet the minimum spending requirements on 2 different cards!

Or, you could hit a spending bonus on 1 card.  And meet the minimum spending on another.  That way, you get 2 bonuses instead of one!

Bottom Line

You can pay your IRS tax bill with a credit card.  But it will cost you 1.87% to ~2.25% in fees, depending on which IRS-approved payment processor you choose.  The cheapest option is Pay 1040, which charges a 1.87% fee.  

This is usually NOT worth it, unless you want to quickly meet credit card minimum spending requirements.  Or are close to meeting a bonus spending requirement to earn extra miles, points, or perks on certain cards.

That said, you can usually make 2 tax payments to the government.  And depending on your travel goals, you could get a lot of Big Travel with Small Money from the points you earn on 2 different cards!

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Editorial Disclaimer: Neither the responses below nor the editorial content on this page are provided or commissioned by the bank advertisers, and have not been reviewed, approved or otherwise endorsed by the bank advertisers. Opinions expressed here are the author’s alone, not those of the bank advertisers. It is not the bank advertisers’ responsibility to ensure all posts and/or questions are answered.

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5 responses to “How to Meet Minimum Spending Requirements by Paying Your Taxes

  1. BBVA AMEX offers 5% rebate on purchases during the March NBA playoff ( about 2 weeks?). It seems it is a time to charge tax on it and you get the sign on bonus (200?) to boot. They declined me citing busy applications and “NEVER owe money “.

  2. Your math is a little off on 5,000 our payment you would make a little over $8 with a 2% cash back all ads because you also earn points on the 1.87% fee

  3. @PJ – Sounds interesting! Definitely a good offer if you have some flexibility. Their application rules sound pretty tough, though!

    @Adam – Thanks, Adam! I’ve updated the post. It all adds up!

  4. Great post, but enough of the “That said” at the beginning of so many sentences. It’s become like “uh” “ya know” and “I mean”.

  5. Pingback: Meeting the Minimum Spend Requirement on Credit Cards