Opening New CC for Federal Income Tax Bill
Opening New CC for Federal Income Tax Bill
Looking at a $7k federal income tax bill this year. Thinking about opening a Capital One Savor card to pay the bill and getting $500 bonus then closing the card before the annual fee kicks in. Would i also get the 1% rewards on the $7k to help offset the 1.87% convenience fee?
Other than the hassle? what are the drawbacks?
Other than the hassle? what are the drawbacks?
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Re: Opening New CC for Federal Income Tax Bill
You only have to spend $3k to get the bonus so why charge $7k and pay a fee on all of it?
Re: Opening New CC for Federal Income Tax Bill
Wow. That's an awesome idea. But I guess you would have to be a low spender (can't do 3k in 3 months) and a high earner (3k more tax than last year) to not call the 2% fee lost money. Rare combo.
Re: Opening New CC for Federal Income Tax Bill
Think I can put 3k on capital one card and the remainder on current 2% cash back card to optimize?michaeljc70 wrote: ↑Sun Feb 03, 2019 8:44 pmYou only have to spend $3k to get the bonus so why charge $7k and pay a fee on all of it?
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Re: Opening New CC for Federal Income Tax Bill
Sure. Or just pay the remaining $4k with a check.gmc4h232 wrote: ↑Sun Feb 03, 2019 8:58 pmThink I can put 3k on capital one card and the remainder on current 2% cash back card to optimize?michaeljc70 wrote: ↑Sun Feb 03, 2019 8:44 pmYou only have to spend $3k to get the bonus so why charge $7k and pay a fee on all of it?
Re: Opening New CC for Federal Income Tax Bill
Putting 4k on a 2% cash back card nets you a grand total of $5.20 compared to simply paying by check. The reward is miniscule, but if you are planning to hyper optimize the rewards, it may be worth it.
Re: Opening New CC for Federal Income Tax Bill
Does anyone know if the fees paid to the processor are tax deductible?
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
- whodidntante
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Re: Opening New CC for Federal Income Tax Bill
It may be deductible for a business. I think some/all 2% floor deductions were eliminated for individuals. I doubt many individuals could deduct it anyway.flight wrote: ↑Sun Feb 03, 2019 9:12 pmDoes anyone know if the fees paid to the processor are tax deductible?
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
- dodecahedron
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Re: Opening New CC for Federal Income Tax Bill
They used to be included as a misc itemized deduction on Schedule A. Under TCJA, misc deductions are generally no longer allowed on federal returns. Some state income tax rules might allow it as a deduction from state taxable income.flight wrote: ↑Sun Feb 03, 2019 9:12 pmDoes anyone know if the fees paid to the processor are tax deductible?
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
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Re: Opening New CC for Federal Income Tax Bill
Why not get another card that pays for $4K spend too, such as the Chase Saphire Preferred ($500 cash or $625 airfare).gmc4h232 wrote: ↑Sun Feb 03, 2019 8:58 pmThink I can put 3k on capital one card and the remainder on current 2% cash back card to optimize?michaeljc70 wrote: ↑Sun Feb 03, 2019 8:44 pmYou only have to spend $3k to get the bonus so why charge $7k and pay a fee on all of it?
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Re: Opening New CC for Federal Income Tax Bill
Whether or not you would get the 1% rewards depends upon how Capital One treats the tax payment. If they treat it as a purchase, you probably would get the rewards. If they treat it as a cash advance, you would not. I'm sure there is a thread on Reddit or myFICO that addresses such issues. You should ask your question there.gmc4h232 wrote: ↑Sun Feb 03, 2019 8:23 pmLooking at a $7k federal income tax bill this year. Thinking about opening a Capital One Savor card to pay the bill and getting $500 bonus then closing the card before the annual fee kicks in. Would i also get the 1% rewards on the $7k to help offset the 1.87% convenience fee?
Other than the hassle? what are the drawbacks?
Re: Opening New CC for Federal Income Tax Bill
What about using EFTPS? There are no processing fees.flight wrote: ↑Sun Feb 03, 2019 9:12 pmDoes anyone know if the fees paid to the processor are tax deductible?
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
Edit: Never mind the question.
Last edited by khh on Sun Feb 03, 2019 9:42 pm, edited 1 time in total.
Re: Opening New CC for Federal Income Tax Bill
I get $6.70. Here is my math:
$4,000 * 1.87% processing fee = $74.80; $4074.80 total charged to card; $4,074.80*2% = $81.50 in rewards. $81.50-$74.80 = $6.70
If I write a check, I have to write a check and mail it which means I also have to buy a stamp.
So to recap, I make money paying by CC and save the hassle of having to mail.
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Re: Opening New CC for Federal Income Tax Bill
There are for credit cards:khh wrote: ↑Sun Feb 03, 2019 9:29 pmWhat about using EFTPS? There are no processing fees.flight wrote: ↑Sun Feb 03, 2019 9:12 pmDoes anyone know if the fees paid to the processor are tax deductible?
I noticed this on the IRS website:
Fees and Information
Your payment will be processed by a payment processor who will charge a processing fee.
The fees vary by service provider and may be tax deductible.
thanks
Edit: Never mind the question.
https://www.irs.gov/payments/pay-taxes- ... debit-card
Re: Opening New CC for Federal Income Tax Bill
Card approved.
Total elapsed time - 4 minutes 37 seconds.
Phase 1 complete.
Total elapsed time - 4 minutes 37 seconds.
Phase 1 complete.
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Re: Opening New CC for Federal Income Tax Bill
I would set the cash advance limit on the card to $0 or as low as they will let. Sometimes these get coded as a cash advance and you will pay a 3% fee and get no cash back.
Re: Opening New CC for Federal Income Tax Bill
I don't think it will, but wouldn't lowering your limit just net you another fee for exceeding it?Gil Gunderson wrote: ↑Mon Feb 04, 2019 8:20 pmI would set the cash advance limit on the card to $0 or as low as they will let. Sometimes these get coded as a cash advance and you will pay a 3% fee and get no cash back.
Re: Opening New CC for Federal Income Tax Bill
Gil Gunderson wrote: ↑Mon Feb 04, 2019 8:20 pmI would set the cash advance limit on the card to $0 or as low as they will let. Sometimes these get coded as a cash advance and you will pay a 3% fee and get no cash back.
I guess it is possible, but I've paid taxes several times with credit cards for similar reasons as OP, and it's never been coded as a cash advance. It's a good, legitimate way to hit credit card spend requirements when used strategically to achieve bonuses.
Re: Opening New CC for Federal Income Tax Bill
Why would this ever be coded as a cash advance?jhh9327 wrote: ↑Mon Feb 04, 2019 8:30 pmGil Gunderson wrote: ↑Mon Feb 04, 2019 8:20 pmI would set the cash advance limit on the card to $0 or as low as they will let. Sometimes these get coded as a cash advance and you will pay a 3% fee and get no cash back.
I guess it is possible, but I've paid taxes several times with credit cards for similar reasons as OP, and it's never been coded as a cash advance. It's a good, legitimate way to hit credit card spend requirements when used strategically to achieve bonuses.
- whodidntante
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Re: Opening New CC for Federal Income Tax Bill
Check docofcredit. I've seen 1k bonuses for 7k of spending recently.gmc4h232 wrote: ↑Sun Feb 03, 2019 8:23 pmLooking at a $7k federal income tax bill this year. Thinking about opening a Capital One Savor card to pay the bill and getting $500 bonus then closing the card before the annual fee kicks in. Would i also get the 1% rewards on the $7k to help offset the 1.87% convenience fee?
Other than the hassle? what are the drawbacks?
Re: Opening New CC for Federal Income Tax Bill
Can OP bump this when it works (500 posts). If, god forbid, my taxes take a big jump this year, and I fail to estimate them properly
, I'd like to employ this strategy this year.
Also, do you have to wait for return to be processed before you pay, or can you pay at any time between 1/28 and 4/15?

Also, do you have to wait for return to be processed before you pay, or can you pay at any time between 1/28 and 4/15?
Re: Opening New CC for Federal Income Tax Bill
Savor card came in the mail yesterday. It's metal! How neat!
Spent approximately 9 minutes on the phone with customer service activating the card and poking around the online account and linking savings acct for future bill paying.
Total elapsed time so far - Approximately 14 minutes.
Still waiting on 1099 from Vanguard to file taxes....
Spent approximately 9 minutes on the phone with customer service activating the card and poking around the online account and linking savings acct for future bill paying.
Total elapsed time so far - Approximately 14 minutes.
Still waiting on 1099 from Vanguard to file taxes....
Re: Opening New CC for Federal Income Tax Bill
If you owe taxes, I'm not seeing why you would want to have your return "processed" before paying the taxes.
I think that you would want to pay the taxes when you submit the return. Likely, as close to April 15 as possible . . . .
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Re: Opening New CC for Federal Income Tax Bill
Yes. I may prepare my taxes as soon as I have all the forms but I'm no rush to file.
Re: Opening New CC for Federal Income Tax Bill
When you file/pay impacts the amount of the underpayment penalty if one is being assessed. So just keep that in mind.
Re: Opening New CC for Federal Income Tax Bill
E-filed with turbo tax on Sunday and paid $2,946 of the tax bill + $55.09 convenience fee with the new card through pay1040.com. Made a second payment on pay1040.com for the balance of tax owed on citi double cash card.pdavi21 wrote: ↑Tue Feb 05, 2019 10:13 amCan OP bump this when it works (500 posts). If, god forbid, my taxes take a big jump this year, and I fail to estimate them properly, I'd like to employ this strategy this year.
Also, do you have to wait for return to be processed before you pay, or can you pay at any time between 1/28 and 4/15?
$530.01 in rewards posted to the new CC account today. I've already applied that amount to the CC balance. Should post in 2-3 business days.
Re: Opening New CC for Federal Income Tax Bill
Probably could have done this...MotoTrojan wrote: ↑Sun Feb 03, 2019 9:26 pmWhy not get another card that pays for $4K spend too, such as the Chase Saphire Preferred ($500 cash or $625 airfare).gmc4h232 wrote: ↑Sun Feb 03, 2019 8:58 pmThink I can put 3k on capital one card and the remainder on current 2% cash back card to optimize?michaeljc70 wrote: ↑Sun Feb 03, 2019 8:44 pmYou only have to spend $3k to get the bonus so why charge $7k and pay a fee on all of it?
Re: Opening New CC for Federal Income Tax Bill
Cool, thanks.gmc4h232 wrote: ↑Tue Feb 19, 2019 8:51 pmE-filed with turbo tax on Sunday and paid $2,946 of the tax bill + $55.09 convenience fee with the new card through pay1040.com. Made a second payment on pay1040.com for the balance of tax owed on citi double cash card.pdavi21 wrote: ↑Tue Feb 05, 2019 10:13 amCan OP bump this when it works (500 posts). If, god forbid, my taxes take a big jump this year, and I fail to estimate them properly, I'd like to employ this strategy this year.
Also, do you have to wait for return to be processed before you pay, or can you pay at any time between 1/28 and 4/15?
$530.01 in rewards posted to the new CC account today. I've already applied that amount to the CC balance. Should post in 2-3 business days.
Re: Opening New CC for Federal Income Tax Bill
I really want to do this too but I may have run out of cards with big bonuses. Will be on the lookout next month or so.
Re: Opening New CC for Federal Income Tax Bill
If you gonna play that trick, may as well find the cards with the best bonuses.gmc4h232 wrote: ↑Sun Feb 03, 2019 8:23 pmLooking at a $7k federal income tax bill this year. Thinking about opening a Capital One Savor card to pay the bill and getting $500 bonus then closing the card before the annual fee kicks in. Would i also get the 1% rewards on the $7k to help offset the 1.87% convenience fee?
Other than the hassle? what are the drawbacks?
I would go with the Chase Ink Plus Business card: spend $5K, get 80K Chase Points (to me those are worth around $1.2K). Minus the $100 for the payment fees and $95 for annual fee.
"You can get more with a kind word and a gun than with just a kind word." George Washington
Re: Opening New CC for Federal Income Tax Bill
SPG AmEx has been rebranded as Bonvoy AmEx. I just saw a 100k points bonus out there. $5k min spend in three months. There is a $450 annual fee BUT you get reimbursed for $300 of Marriott spend as well as Global Entry.