April 15. The day for the deadline of tax payments. However, if you are a freelancer or self-employed, then you will have to make an estimated tax payments every three months, with the late payment due on January 15.
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You might want to consider charging your taxes so that you are able to earn points, miles, or cash back if you are playing around with credit card rewards. However, there is also a cost when it comes to using your credit card. In this guide, we will cover the many pros and cons of paying your taxed with your credit card.
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Table of Contents
Choose Which Way To Pay Your Taxes
There are many ways in which you can make tax payments to the federal government. This include checks by mail and via debit or credit card. To process debit and credit card payments, the IRS authorizes three different companies:
|Debit Fee: $2.55||Debit Fee: $2.58||Debit Fee: $2.00 or $3.95*|
|Credit Fee: 1.96%
|Credit Fee: 1.87%
|Credit Fee: 1.87%
Paying By Check
The least expensive way to pay your taxes is mailing a check to the IRS. There is no “convenience” fee. The only cost is to provide the envelope ad stamp
Paying By Debit Card
When paying your taxes with a debit card, it involves a flat convenience fee that cost between $2 to $3.95. It depends on the payment processer that you choose and whether your tax payment is over $1,000. This is one of way to pay your taxes that is inexpensive because your fee will always be less than $4.
Paying By Credit Card
The method of paying your taxes using a credit card comes with convenience fee. This is a percentage of the tax amount. The fee costs are between 1.87% to 1.99%.
Besides credit cards, all three processors now accept digital wallet payments:
|American Express Checkout||X||X||X|
Why You Should Pay Taxes With Your Credit Card
There are advantages when it comes to paying taxes using your credit card, although, it is he most expensive way.
- You will earn reward on your tax payments. This is like any other charge to your rewards card. When using the right card, the value of the points, miles or cash back you earn on your tax payments will overall more than cover the cost of the processing fee.
- Charging your tax payments to your credit card could also bring the sign-up bonuses within reach. This is also the same way for unlocking any card benefits that would require any spending threshold.
- To pay off your taxes over time and without interest, you can used a credit card with interest-free financing on new purchases.
Why You Shouldn’t Pay Taxes With Your Credit Card
The one thing that we do not recommend is financing a tax payment using your credit card if your interest rate is high. As a reminder, if you cannot pay your statement balance in full then do not charge taxes to your credit card. This is unless you have a zero-interest introductory rate.
We advise you to talk to your accountant or tax advisor and go over all of your options. There is a possibility that the IRS will let you make a payment plan with lower interest than most credit cards.
Best Credit Cards For Tax Payments
|Credit Card||Earning Rate||Potential Return|
|The Blue Business® Plus Credit Card from American Express||2X Points||4%|
|American Express EveryDay Credit Card||1X Points||3%|
|The Business Platinum Card® from American Express||1X Points||3%|
|Chase Freedom Unlimited®||1.5% Cash Back||3%|
|Ink Business Unlimited? Credit Card||1.5% Cash Back||3%|
|Discover it Miles Card||1.5X Miles||3%|
|Alliant Visa||2.5% Cash Back||3%|
|Capital One® Venture® Rewards Credit Card||2X Miles||2.8%|
|Capital One® Spark® Cash for Business||2X Miles||2.8%|
The Best Among Those Credit Cards
The Ink Business Unlimited® Credit Card offers $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.
You'll earn an unlimited 1.5% cash back on every purchase made for your business and you'll receive employee cards at no additional cost.
This card carries no annual fee and you'll have the opportunity to take advantage of a 0% introductory APR for 12 months on purchases
The The Business Platinum Card® from American Express has a welcome offer of 100,000 Membership Rewards points after you spend $15,000 on eligible purchases within the first 3 months of Card Membership.
You'll also earn 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com. In addition, you'll get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each eligible purchase of $5,000 or more. You can get up to 1 million additional points per year.
If you use your Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, you can get 35% of the points back, up to 500,000 bonus points per calendar year.
PAY OVER TIME OPTION: A flexible payment option to help manage cash flow on purchases of $100 or more.
This card does come with a $595 annual fee. (See Rates & Fees) Now, you can earn up to $200 in statement credits annually by getting up to $100 semi-annually for U.S. purchases with Dell. Terms apply.
With The Blue Business® Plus Credit Card from American Express, you'll get rewarded for business as usual. Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners.
You'll earn 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter. You can enjoy the flexibility to put more purchases on the Card and earn rewards when you buy above your credit limit*. You’ve got the power to use your Card beyond its credit limit* with Expanded Buying Power.
More buying power allows for your business means more opportunities to earn points. That’s everyday business with the Blue Business Plus Card.
There card comes with no annual fee (See Rates & Fees).
The Capital One Spark Cash for Business offers a one-time $500 cash bonus once you spend $4,500 on purchases within 3 months from account opening.
You're able to earn an unlimited 2% cash back could mean thousands of dollars each year going back into your business. Use Spark Cash across all your business spend, with no categories to limit your purchasing.
This card does come with a $95 annual fee, however, there is a $0 intro annual fee for the first year.
It is solely up to you if you decide to make your tax payment with a credit card. It is a great idea to do so if you can pay your balance in full, your rewards supersede the convenience fee, or if you have 0% intro APR card. Read the information above to review the best options for you.