Earn a Profit Paying Taxes With This Valuable 2-Card Combo!

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Earn a Profit Paying Taxes With This Valuable 2-Card Combo!

Million Mile SecretsEarn a Profit Paying Taxes With This Valuable 2-Card Combo!Million Mile Secrets Team

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There’s a 2-card combination that can make paying your taxes a little less painful!

Folks with the Chase Sapphire Reserve and Chase 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 no-annual-fee Freedom Unlimited card and then transfer the Chase Ultimate Rewards points to your Sapphire Reserve account to redeem for travel.

Pay Taxes With A Credit Card And Earn A Profit
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 Southern California!

Million Mile Secrets team member Keith uses this strategy to come out ahead with payments he’s already making!

How to Pay Taxes With a Credit Card

Link:   IRS Pay Taxes With a Credit or Debit Card 

Link:   How (and When!) to Use a Credit Card to Pay 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 A Credit Card And Earn A Profit
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:   Chase 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

Keep in mind, paying taxes with a credit card definitely does NOT make sense if you can’t pay your balance 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 earns 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 an effective ~$21 profit.  While you won’t make a lot of money, it’s an easy way to earn Big Travel 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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Chase Sapphire Reserve®

Chase Sapphire Reserve®

  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • Named "Best Premium Travel Credit Card" for 2018 by MONEY® Magazine
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
  • 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
  • Up to $100 application fee credit for Global Entry or TSA Pre✓®

More Info

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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I have a large tax payment due and am considering doing this but they ask for both my husbands and my social security. Are we sure this is secure?

Hi Diane — It’s team member Keith here. I use Pay1040 and have never had any issues.

I just paid my tax by CC. I used TurboTax and paid 2.99% fee. Anyone used turbotax to file tax and paid tax by Business Tax Payment or
Pay 1040? Is it easy?

Million Mile Secrets

I don’t have personal experience with this but it should be possible (just like if you filed with Turbo Tax and sent the IRS a check).

@Brandon: last year I purposely overpaid my taxes at the 3rd quarter estimated payment. Yes, govt had my money for a couple months, but I got the points on the cc to complete a spend and got the refund just after filing.
Question: if I get the Chase biz cash card, can I move my points to my husband’s CSR? Can I do it whether or not I have my own CSR or CSP?

Million Mile Secrets

Thanks for sharing!

Yes, you can transfer points from your Ink Business Cash card to your husband’s Chase Sapphire Reserve account.
This post has a video guide with more information: https://millionmilesecrets.com/2018/01/10/video-guide-combine-chase-ultimate-rewards-points-to-one-card-or-transfer-points-to-a-spouse/

I typically pay my taxes with a 2% cash back card, so I would profit $8.37 on a $5k payment.

The method described in this article is not really “profit” per say. Rather, you’re buying Chase points.. Your ~$21 in “profit” is tied up as ~$115 in travel. If you have an immediate need to book airfare and the Chase portal prices the same, great. I personally have too many Chase points and don’t want to increase my holding. Further, many airfare I have come across price more than $11 cheaper on other web sites, making this investment a loss compared to a 2% cash back card.

Million Mile Secrets

Thanks for commenting! Good points. I’ve found airfare prices on the Chase travel portal are typically the same as what you’ll find on other online travel agencies. Having too many Chase points sounds like a nice problem to have! 🙂

For “normal” airfare, that’s true. And recently I was able to use my Chase points on the $400 United New Zealand mistake fare. But a lot of the mistake fares I book are OTA specific. Or I book complicated itineraries via the ITA Matrix plugin that I just can’t replicate on Chase’s portal.

I just hit 200k Chase points on top of the 200k Amex, 200k AA miles, 100k Alaska, and 100k on other programs. Time to book a suite to somewhere…

Informative article. Further to your calculation, I believe the $93.50 you pay in fees are Tax-deductible as well !

Unfortunately not the case moving forward with the new tax changes. Miscellaneous itemized deductions, such as these sorts of fees, have been eliminated as deductions.

Million Mile Secrets

Good tip! Thanks for commenting!

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