Category Archives: Paying Taxes

Will You Be Charged Cash Advance Fees for Paying Taxes With a Credit Card?

[Disclosure: Emily and I get a commission for some, but not all, of the links to the cards in this post. We let you know about the best offers even when they don’t pay us a commission! You don’t have to use our links, but we’re very grateful when you do!]

Million Mile Secrets reader TIO comments:

If I use Citi 100,000 American Airlines credit card to pay for taxes on IRS payment web sites, do you think Citi will count that as a cash advance?  Thanks.

TIO is referring to the Citi American Airlines Executive card, which has a sign-up bonus of 100,000 American Airlines miles after you spend $10,000 in the 1st 3 months.

Will You Be Charged Cash Advance Fees For Paying Taxes With A Credit Card

Spending $10,000 in 3 Months Could Be Challenging

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How to See if Your Credit, Debit, & Gift Card Tax Payments Are Received by the IRS

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I’ve written before on how to use the Delta debit card to earn miles while paying taxes and how to select the top credit cards to use to pay your taxes.  Frequent Miler has also written on how to use gift cards to pay your taxes.  You do pay a fee for using a credit card to pay your taxes, but it could be worth it to complete the minimum spending on your credit cards or to earn airline and hotel perks.

The IRS website suggests that you can make 2 estimated tax payments per quarter using a credit card, but readers commented that you can make more payments with a credit card or a gift card by:

  • Using each of the 4 different tax payment providers to make 2 estimated tax payments per quarter online for a total of 8 online payments
  • Calling each of the 4 payment processors and have them process additional payments over the telephone

Note that not all providers offer the same fee for using a credit card and the flat fee of $3.49 for using your debit card.

But talk to YOUR accountant or lawyer before making more than 2 payments per quarter with a credit card towards your quarterly taxes, since the IRS rules aren’t very clear on what is the maximum number of payments allowed. Continue reading

The 10 Best Ways to Pay Your Taxes With Credit & Debit Cards

 Disclaimer:  I am NOT a tax professional, so please consult YOUR tax professional before you make any tax-related decisions.  Information in this post continually changes, so please double check before applying for cards or making any payments.  I get a referral for some of the cards in this post.

Many folks who are self-employed have to pay estimated taxes to the IRS.  However, they can make up to 2 payments a quarter using a credit or debit card, but have to pay a convenience fee.

The IRS website suggests that you can only make 2 payments a quarter using a credit card, but it isn’t clear if that is 2 payments per quarter per credit card service provider or if it is a blanket restriction on the number of payments you can make through any credit card service provider.

However, the website for paying my Kansas state taxes did NOT have a restriction on the number of payments which I could make per quarter.  So I’d use multiple cards with lower credit limits to pay my state taxes and “save” my cards with larger credit limits to pay my federal taxes.

For paying federal taxes, the lowest fee for using a Visa or MasterCard credit card is 1.89% through Pay USA Taxes and the lowest fee for using an American Express credit card is 2.29% from Value Tax Payment.  For Kansas state tax, the lowest fee which I could find was 2.25% for all card types from Pay KS Tax.  So try to use your American Express cards for state payments first, and save your Visa/MasterCard for federal payments to take advantage of the lower convenience fees.

For most folks, it could be worth it to pay a convenience fee just to meet the minimum spending requirement for a credit card sign-up bonus.  If you’ve got a small tax payment you could even earn 5X points by using a Vanilla Visa and following Frequent Miler’s instructions.

But Big Spenders get to choose from additional benefits!  I’ve drawn from my series on Big Spenders to list the best ways to pay your taxes with a credit card if you’ve got tens and hundreds of thousands of dollars in tax payments.

I’ve listed the options according to cost (so American Express cards end up at the bottom because of the additional fee), my preferences and what I value.

CardTax Paid Convenience Fee (%)Convenience Fee ($)Benefits
Delta Debit Card$35,000-$3.4935,000 Delta Miles
Citi Hilton Reserve$40,000 (Within 1 Calendar Year)1.89%$756120,000 Hilton Points + Top-Tier Hilton Diamond Status +1 Free Weekend Night
Chase Southwest Premier$110,000 (Within 1 Calendar Year)1.89%$2,079110,000 Southwest Points + 1 Companion Pass
Chase United Explorer Personal

Chase United Explorer (Business)
$25,000 (Within 1 Calendar Year)1.89%$47335,000 United Miles
Chase United Club (Personal)

Chase United Club (Business)
$10,0001.89%$18915,000 United Miles
Chase British Airways$30,000 (Within 1 Calendar Year)1.89%$567 1 Travel Together Ticket + 37,500 British Airways Avios Points
American Express Premier Rewards Gold$30,000 (Within 1 Calendar Year)2.29% $687 45,000 Membership Rewards Points
American Express SPG (Personal)

American Express SPG (Business)
$20,000

$30,000 (Within 1 Calendar Year)
2.29%

2.29%
$458

$687
- 20,000 Starwood Points (Convertible to 25,000 Airline Miles)

- 30,000 Starwood Points + Starwood Gold Elite Status
Bank of America Virgin Atlantic$15,000
$25,000
(Within 1 Calendar Year)
2.29%$344

$573
- 30,000 Virgin Atlantic Miles (or 60,000 Hilton Hotel Points)

- 52,500 Virgin Atlantic Miles (or 105,000 Hilton Hotel Points)
American Express Delta Platinum & Reserve$55,000


$110,000


$170,000


$280,000
(Within 1 Calendar Year)
2.29%


2.29%


2.29%


2.29%
$1,260


$2,519


$3,893


$6,412
- 80,000 Delta Miles & Silver Status

- 160,000 Delta Miles & Gold Medallion Status

-250,000 Delta Miles & Platinum Medallion Status

- 410,000 Delta Miles & Diamond Medallion Status

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