Pay Your Taxes by Credit Card and Score Some Points!

pay your taxes by credit card and score points
How many of you build, track and utilize credit card points for personal benefit? You can pay your taxes using a major credit card or a debit card online. Individuals can make these payments 24 hours a day and seven days a week.

How many of you build, track and utilize credit card points for personal benefit?  It’s a great tax strategy (credit card point redemption benefits are currently tax-free), AND it’s an added bonus when you have to pay one of the most dreaded bills of the year.

No matter how you file your income tax return—by mailing a paper copy or electronically—you can pay your taxes using a major credit card or a debit card online. Individuals can make these payments 24 hours a day, seven days a week, using certain cards as long as they follow the proper procedure.

There are several advantages when turning to a credit card to pay your tax bill:

  • Delay paying the actual cash for your taxes
  • Hopefully get a lower interest rate than the IRS would give you if you were on a payment plan
  • Avoid any penalties if you don’t have the cash and chose not to pay anything
  • and of course, airline mileage or certain reward programs include cash back cards

There are only a couple disadvantages, such as the convenience fee charged by service providers (both for credit and debit card transactions) is not deductible and of course paying the interest is no fun and not tax deductible either.

Also, keep in mind that redeeming airline miles isn’t taxable. This is exciting that you can earn points for taking tax-deductible travel, and then, even more, miles/points by paying your taxes with a credit card. See related article here.

Two companies, Official Payments Corporation and Link2Gov Corporation, are authorized service providers for purposes of accepting credit cards, and debit cards from both electronic and paper filers. The companies have their own fee schedules and provide internet payment services. You can use these companies to charge taxes to an American Express, Discover Card, MasterCard, or VISA card or BillMeLater account or pay using a debit card. If you file early, you can still wait until April to make the online payment.

You can use the above credit card methods to pay any tax due on your Form 1040, 1040A, or 1040EZ; individual estimated taxes; installment payments; payments with an extension of time to file (Form 4868); trust fund recovery penalty; and Form 5329 (IRA taxes).

Be aware that also some states accept credit card payments of state taxes. The federal and state payments are not combined.

Before you use any of these programs, make sure you do your research on the fees, as well as any other potential pros and cons.  Maybe paying your taxes could actually give you a vacation when it’s all over.

Interested in Learning More:

* To sign up for Mark’s weekly Free Newsletter and receive his Free E-Book “The Ultimate Tax Strategy Guide – 30 Steps to Saving the Most Money on Your Taxes” visit www.markjkohler.com.

Mark J. Kohler is a CPA, Attorney, co-host of the PodCasts “The Main Street Business Podcast” and “The Directed IRA Podcast”, and the author of “The Business Owner’s Guide to Financial Freedom- What Wall Street Isn’t Telling You” and, “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions”, as well as several other well-known books. He is also the CFO of Directed IRA Trust Company, and a senior partner at the law firm KKOS Lawyers.

Share:

Facebook
Twitter
Pinterest
LinkedIn
Mark Kohler

Mark Kohler

On Key

Related Posts

form 1099

1099 Rules for Business Owners in 2024

Businesses will now file Form 1099-NEC for each person in the course of the payor’s business to whom they paid at least $600 during the year. This payment would have been for services performed by a person or company who IS NOT the payor’s employee.

student seated leaning back resting his head with his hands in the back of his head

What to do If I can’t pay my Taxes

Are you wondering what to do If you can’t pay your taxes by October 16th this year? Do you feel like you don’t have any options, and all is lost? Are you considering not even filing your tax return at all? The worst thing a taxpayer can do: is to do nothing at all. Here