Earn a Profit Paying Taxes With Chase Sapphire Reserve & Freedom Unlimited

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I’ve written about paying income taxes with a credit card to meet minimum spending requirements or earn a big spending bonus.

But now folks with the Chase Sapphire Reserve and Freedom Unlimited cards can actually earn a profit paying their taxes.

Even with processing fees, you’ll come out ahead when you pay your taxes with the Freedom Unlimited and transfer the Chase Ultimate Rewards points to your Sapphire Reserve account to redeem for travel.

Pay Taxes With Credit Card To Earn Points

Combine the Perks of Your Chase Freedom Unlimited and Sapphire Reserve Cards to Pay Taxes and Earn a Profit When You Redeem Points for Big Travel to Places Like Santa Monica, California!

I’ll show you the math!

How to Pay Taxes With a Credit Card

Link:   IRS Pay Taxes With a Credit or Debit Card 

Link:   How to Meet Minimum Spending Requirements by Paying Your Taxes! 

The IRS allows you to pay taxes with a credit card.  But you must use a 3rd-party payment processor.  You can NOT pay the government directly using a credit card.

There are 2 approved IRS payment processors that charge a 1.87% fee when paying with a credit card:

Pay Taxes With Credit Card To Earn Points

You Can Pay Your Income Taxes With a Credit Card Using 3rd-Party Payment Processors, Like Pay1040.com, for a 1.87% Fee

There are other approved processors, but you’ll pay higher fees.

Note:  You will NOT be charged cash advance fees when you pay with a credit card.

Earn a Profit With Tax Payment

Link:   Chase Sapphire Reserve 

Link:   Freedom Unlimited

With the Chase Freedom Unlimited card, you earn 1.5X Chase Ultimate Rewards points per $1 you spend on all purchases with NO limit.

And you can get more value for your Freedom Unlimited points by transferring them to your Sapphire Reserve account.  Because each point in your Sapphire Reserve account is worth 1.5 cents when you redeem for travel through the Chase portal.

Here’s how you can earn a profit with your tax payment.

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

  • $5,093.50 with a credit card ($5,000 x 1.87% fee = $93.50)

If you pay with the Chase Freedom Unlimited, you’d earn:

  • ~7,640 Chase Ultimate Rewards points ($5,093.50 x 1.5X Chase Ultimate Rewards points)

Then, transfer the points to your Sapphire Reserve account to redeem for travel through the Chase Travel portal.  You’ll get:

  • ~$115 worth of travel (~7,640 points X 1.5 cents per point)

So you’ll pay ~$94 in fees for your tax payment.  But you will get ~$115 worth of travel.  That’s a ~$21 profit (~$115 value of points – ~$94 fee for tax payment)!

Here’s how you’d benefit using different tax payment amounts.

Tax Payment AmountTax Payment with 1.87% FeeEarn 1.5X Chase Ultimate Rewards Points With Freedom UnlimitedRedeem for Travel With Sapphire ReserveProfit
$5,000~$5,094~7,640~$115~$21
$10,000~$10,187~15,281~$229~$42
$15,000~$15,281~22,921~$344~$63
$20,000~$20,374~30,561~$458~$84

Keep in mind, 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.

Bottom Line

If you have both the Chase Freedom Unlimited and Chase Sapphire Reserve cards, you can earn a profit paying your income taxes with a 3rd-party processor like Pay 1040, even with the fees.

Because the Chase Freedom Unlimited gets you 1.5X Chase Ultimate Rewards points per $1 on all purchases.  Then, you can transfer the points to your Sapphire Reserve account to take advantage of the 50% point bonus on travel booked through the Chase portal.

For example, a $5,000 tax payment can earn you a ~$21 profit.  While you won’t make a lot of money, it’s an easy way to earn points instead of paying directly from your bank account.

Remember, it’s not worth paying taxes this way if you can’t pay your balance off in full.  Because the interest charges will offset the value of the points.

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11 responses to “Earn a Profit Paying Taxes With Chase Sapphire Reserve & Freedom Unlimited

  1. Why would I need to transfer my points when I can jut use CSR to get the 1.5x on travel?

    Thanks,

  2. Another option, pay with Amex biz platinum to receive 50% bonus on purchases over $10k. Then use travel portal to pay with points for your selected airline and receive 50% return on points (half off).

  3. amex business portal can have “piss” poor flight prices when compared to google flights or kayak. as such, your ability to get that 50% bonus is far from guaranteed when you have to book airfare that costs $400/ticket more than where you can get it elsewhere
    quite disappointed with amex travel portal. B class tickets on LH own site were $400 cheaper than anything amex was showing. and many flights were not showing at all. i think it’s a bit of a gimmick to be honest.

  4. Oops. Pay $5000 to get a profit of $20?
    Probably this game is over.
    What next? Open a credit card to get a chicken free?

    • Cindy and Rick

      Well, if you can come out a bit ahead by paying taxes via credit card, then it’s a win-win, plus you can have another statement period to pay off taxes, which is great for me. Making a dime is better than losing one. And it’s basically free miles, if you come out a bit ahead. Since I buy gift cards at Staples every month (Chase Ink Bold) and pay $6.00 per thousand miles, anything I can get without much cost is a great deal.

      I always pay taxes with a credit card. I just cannot decide what to do. We will owe around $20K additional this year, and that amount on our Capital One Venture card will pay the fees with the 2% statement credit, if we choose to use it. I am trying to decide what to do myself. I have the Chase Sapphire Reserve as well, but I don’t have the Chase Freedom. I have to do the math before next Tuesday.

    • @Abc, normally if we use a card that only gives us 1 point per dollar spent and redeems for 1 cent per point then the $5,000 is only worth $5, which is a lot less than the $93+ in fees, so it’s not worth paying with the credit card. Some of us like to get points for as many purchases as we can (without having to pay fees), so if we can find a method of paying taxes with a card that also negates the 1.87% fee then we’ll take it! Lucky’s method not only negates the fee bit gives us extra value! I hope this explantation helps!

  5. Cindy and Rick

    Now I am wishing I had the Chase Freedom card. I wonder if it’s worth it to get another Chase card. I may have too many already and thought I would never need another card. Time to unfreeze the credit again.