Paying IRS taxes with a credit card when e-filing

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MnD
Posts: 5184
Joined: Mon Jan 14, 2008 11:41 am

Paying IRS taxes with a credit card when e-filing

Post by MnD »

I value my credit card rewards at a minimum of at least 2%.
I had seen that some IRS approved credit card processors charge as little as 1.87%.
http://www.irs.gov/uac/Pay-Taxes-by-Cre ... Debit-Card
If I pay after April 7 by CC my bill will not be due until June 5 which also works out nicely for cash flow.
So I was planning to utilize a 1.87% fee processor.

I was disappointed to get to the payment section of Turbotax and found they used a "captive" credit card processor that charges 2.49%.
So I indicated I would mail in payment, e-filed and I now have a paper mail-in payment voucher due April 15.
Any problem with now using a 1.87% processor instead of mailing in the 1040-V voucher? 62 basis points savings using a 2-step process.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Jack
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Joined: Tue Feb 27, 2007 1:24 am

Re: Paying IRS taxes with a credit card when e-filing

Post by Jack »

If your credit card charges a 1.87% fee but rewards are 2.00%, then you save 13 basis points by using your card. On a $10,000 tax bill this earns you $13. How much do you value your time? I would be inclined to just write a check.
jebmke
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Re: Paying IRS taxes with a credit card when e-filing

Post by jebmke »

direct debit ACH
Stay hydrated; don't sweat the small stuff
HouseStark
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Re: Paying IRS taxes with a credit card when e-filing

Post by HouseStark »

You can pay the balance due on your 1040 return any way that is permitted, including going to another payment provider other than the one TT uses.
Topic Author
MnD
Posts: 5184
Joined: Mon Jan 14, 2008 11:41 am

Re: Paying IRS taxes with a credit card when e-filing

Post by MnD »

Jack wrote:If your credit card charges a 1.87% fee but rewards are 2.00%, then you save 13 basis points by using your card. On a $10,000 tax bill this earns you $13. How much do you value your time? I would be inclined to just write a check.
At least 2% - most of the reward cards I use because of how I use them reward at 3% or better.
And the float is almost an additional two months.
The CC pay sites take about as much time as writing a check with no stamp or visit to the post office.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Cuzz35
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Location: Marietta, GA

Re: Paying IRS taxes with a credit card when e-filing

Post by Cuzz35 »

Client of the firm I work for has an estimated $11 million tax bill he wants to pay with his rewards debit card at $35,000 a day. The low man on the accountant totem pole (me) gets to punch in the numbers everyday for over a year. Got to get those extra sky miles. :D
hq38sq43
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Location: Bradenton FL

Re: Paying IRS taxes with a credit card when e-filing

Post by hq38sq43 »

Jack wrote:If your credit card charges a 1.87% fee but rewards are 2.00%, then you save 13 basis points by using your card. On a $10,000 tax bill this earns you $13. How much do you value your time? I would be inclined to just write a check.
Why assume OP's bill is $10,000? Working in an H&R Block office in the 90's, I surprisingly encountered a client who'd made $1.5 million from very astute stock trading and owed IRS ca. $500,000. .0013 x $500,000 = $650.
Harry at Bradenton
ajcp
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Re: Paying IRS taxes with a credit card when e-filing

Post by ajcp »

MnD wrote:
Jack wrote:If your credit card charges a 1.87% fee but rewards are 2.00%, then you save 13 basis points by using your card. On a $10,000 tax bill this earns you $13. How much do you value your time? I would be inclined to just write a check.
At least 2% - most of the reward cards I use because of how I use them reward at 3% or better.
Unless one of the websites is coded as a gas station or something, I suspect you'll only be getting the 2% on this though. :wink:
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