Primer on Paying Taxes With a Credit Card

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yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

Wannaretireearly wrote: Mon Mar 14, 2022 11:01 pm
spammagnet wrote: Mon Mar 14, 2022 10:24 pm
Wannaretireearly wrote: Mon Mar 14, 2022 10:05 pm... Help me figure out the best way to do this thru turbo tax. ...
Please elaborate on what you mean by "thru turbo tax".

You may find you get more suggestions if you change the tone of request. It sounds like you expect others to plan it for you..
Thanks. Sorry for the tone. Just typing fast between errands, I apologize if this came across harsh.

I’ve done my taxes thru TurboTax online. That’s not going to change at this point. So I’ll be using payment options, credit card etc, thru TurboTax.

I’ve signed up for credit card rewards many times, but have never contemplated paying taxes on credit card.

I just tried applying for a chase card and it seems I’ve reached their limit. I may look for hotel points/cards. Given how much I will charge I wonder if there are cards where charging the full 20k on one card would give extra benefits. Like the southwest companion benefit. Thank you 🙏
Just because you did your taxes through TT does not mean you have to pay through TT, you just need to tell TT that you made a payment.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

Oh wow. I had no idea this was an option!
Thank you, yobery.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

If I can’t find/apply for a good rewards card, I may look at a 0% Apr card like this one…

https://www.discover.com/products/it-ca ... es&sku=102
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Mon Mar 14, 2022 11:01 pmThanks. Sorry for the tone. Just typing fast between errands, I apologize if this came across harsh.

I’ve done my taxes thru TurboTax online. That’s not going to change at this point. So I’ll be using payment options, credit card etc, thru TurboTax.

I’ve signed up for credit card rewards many times, but have never contemplated paying taxes on credit card.

I just tried applying for a chase card and it seems I’ve reached their limit. I may look for hotel points/cards. Given how much I will charge I wonder if there are cards where charging the full 20k on one card would give extra benefits. Like the southwest companion benefit. Thank you 🙏
Filing your tax return online through TurboTax does not require that you pay your taxes through TurboTax. Paying your taxes online outside TurboTax does not require that you stop using TurboTax to file your tax return.

Whether you use your tax payments to meet minimum spending requirements for a new account bonus or to earn spending rewards, pay your taxes online through the IRS.gov web site. Their link will take you to the payment processors where you can use credit cards or gift cards (which post as debit cards).

There are processing fees and transaction limits. Debit (gift) cards are cheaper than credit cards. Many card issuers won't give you reward credits for tax payments, hence the value of using the credit card to buy gift cards. How you optimize the fees and bonuses/rewards depends on how many hoops you're willing to jump through.
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Mon Mar 14, 2022 11:17 pm If I can’t find/apply for a good rewards card, I may look at a 0% Apr card like this one…

https://www.discover.com/products/it-ca ... es&sku=102
By "rewards" are you referring to a new account bonus or spending rewards? Either way, that's kind of a separate decision. The task of the tax payment part of the process is figuring out how to minimize the cost.

Of course, you have to know that your method of payment (buying gift cards or direct payment with credit cards) qualifies for the spending goal you're trying to achieve with the credit card.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Mon Mar 14, 2022 11:22 pm
Wannaretireearly wrote: Mon Mar 14, 2022 11:01 pmThanks. Sorry for the tone. Just typing fast between errands, I apologize if this came across harsh.

I’ve done my taxes thru TurboTax online. That’s not going to change at this point. So I’ll be using payment options, credit card etc, thru TurboTax.

I’ve signed up for credit card rewards many times, but have never contemplated paying taxes on credit card.

I just tried applying for a chase card and it seems I’ve reached their limit. I may look for hotel points/cards. Given how much I will charge I wonder if there are cards where charging the full 20k on one card would give extra benefits. Like the southwest companion benefit. Thank you 🙏
Filing your tax return online through TurboTax does not require that you pay your taxes through TurboTax. Paying your taxes online outside TurboTax does not require that you stop using TurboTax to file your tax return.

Whether you use your tax payments to meet minimum spending requirements for a new account bonus or to earn spending rewards, pay your taxes online through the IRS.gov web site. Their link will take you to the payment processors where you can use credit cards or gift cards (which post as debit cards).

There are processing fees and transaction limits. Debit (gift) cards are cheaper than credit cards. Many card issuers won't give you reward credits for tax payments, hence the value of using the credit card to buy gift cards. How you optimize the fees and bonuses/rewards depends on how many hoops you're willing to jump through.
Thank you for the detailed post spammagnet. I don’t think I want to jump thru the gift card hoop. I’d like to either get credit card rewards directly, and/or carry the balance at 0% for a few months (carrying a balance is something I’ve not done before)
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Mon Mar 14, 2022 11:29 pm
Wannaretireearly wrote: Mon Mar 14, 2022 11:17 pm If I can’t find/apply for a good rewards card, I may look at a 0% Apr card like this one…

https://www.discover.com/products/it-ca ... es&sku=102
By "rewards" are you referring to a new account bonus or spending rewards? Either way, that's kind of a separate decision. The task of the tax payment part of the process is figuring out how to minimize the cost.

Of course, you have to know that your method of payment (buying gift cards or direct payment with credit cards) qualifies for the spending goal you're trying to achieve with the credit card.
Got it. As far as rewards goes, I was thinking spending rewards. Hotel or airline points. However I think chase is a no go cos I’ve opened too many cards. So I’ll likely have to go with a non-chase card…
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Mon Mar 14, 2022 11:52 pmGot it. As far as rewards goes, I was thinking spending rewards. Hotel or airline points. However I think chase is a no go cos I’ve opened too many cards. So I’ll likely have to go with a non-chase card…
The Bank of America rewards card set to the online category is popular among many here but the real benefits come when you qualify for platinum honors-level rewards. That's a high, perhaps insurmountable, barrier.

The subject of which card strategy is most rewarding has its own mega-thread.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Tue Mar 15, 2022 12:20 am
Wannaretireearly wrote: Mon Mar 14, 2022 11:52 pmGot it. As far as rewards goes, I was thinking spending rewards. Hotel or airline points. However I think chase is a no go cos I’ve opened too many cards. So I’ll likely have to go with a non-chase card…
The Bank of America rewards card set to the online category is popular among many here but the real benefits come when you qualify for platinum honors-level rewards. That's a high, perhaps insurmountable, barrier.

The subject of which card strategy is most rewarding has its own mega-thread.
Thanks! Lots to think about and decide next few days.
Is there a guide on how to manage the tax payment via irs.gov, while still submitting the tax return thru TurboTax? I feel a little uncomfortable doing that. Apologies if this is rehashing earlier posts/material. Appreciate the help!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

Wannaretireearly wrote: Tue Mar 15, 2022 8:34 am Is there a guide on how to manage the tax payment via irs.gov, while still submitting the tax return thru TurboTax? I feel a little uncomfortable doing that. Apologies if this is rehashing earlier posts/material. Appreciate the help!
When you submit the payment through one the IRS's processors, you get a 1040-ES. In TurboTax, you go to the Estimated Payments screen and enter the details. That's it.

Note that the processor will take a few days to send the money to the IRS, so wait until your IRS.gov account reflects the payment before filing.
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Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

drk wrote: Tue Mar 15, 2022 10:36 am
Wannaretireearly wrote: Tue Mar 15, 2022 8:34 am Is there a guide on how to manage the tax payment via irs.gov, while still submitting the tax return thru TurboTax? I feel a little uncomfortable doing that. Apologies if this is rehashing earlier posts/material. Appreciate the help!
When you submit the payment through one the IRS's processors, you get a 1040-ES. In TurboTax, you go to the Estimated Payments screen and enter the details. That's it.

Note that the processor will take a few days to send the money to the IRS, so wait until your IRS.gov account reflects the payment before filing.
Thank you, drk!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
calwatch
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Re: Primer on Paying Taxes With a Credit Card

Post by calwatch »

whodidntante wrote: Mon Mar 14, 2022 9:50 pm I paid my property taxes like that last year. Both installments. Partial payments are no longer allowed. :P
This is county dependent as my county uses a bespoke system which charges 2.22% per card. Great way to get additional spend in.
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

Wannaretireearly wrote: Tue Mar 15, 2022 10:43 am Thank you, drk!
Sorry, one correction: we're past the deadline for making estimated tax payments, so you'll make a current year payment. You'll still enter it in the same area in TurboTax when going through the "Tell us about taxes you already paid" survey.
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yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

drk wrote: Tue Mar 15, 2022 11:01 am
Wannaretireearly wrote: Tue Mar 15, 2022 10:43 am Thank you, drk!
Sorry, one correction: we're past the deadline for making estimated tax payments, so you'll make a current year payment. You'll still enter it in the same area in TurboTax when going through the "Tell us about taxes you already paid" survey.
Which exact dropdown selection are you using, to pay for TY2021 in mar/apr 2022? I have to make 3 payments to the IRS. Was thinking extension, but when you say "current year payment" which selection is that from the dropdown? Thanks!
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Tue Mar 15, 2022 10:43 am
drk wrote: Tue Mar 15, 2022 10:36 am
Wannaretireearly wrote: Tue Mar 15, 2022 8:34 am Is there a guide on how to manage the tax payment via irs.gov, while still submitting the tax return thru TurboTax? I feel a little uncomfortable doing that. Apologies if this is rehashing earlier posts/material. Appreciate the help!
When you submit the payment through one the IRS's processors, you get a 1040-ES. In TurboTax, you go to the Estimated Payments screen and enter the details. That's it.

Note that the processor will take a few days to send the money to the IRS, so wait until your IRS.gov account reflects the payment before filing.
Thank you, drk!
This is an excerpt from a payment I made last night. (Emphasis added)
Thank you for using Pay1040’s Online Payment Service at www.pay1040.com. This email confirms that your federal tax payment was received and processed by PAY1040 on 3/14/2022 9:42 PM CT. The IRS will use this date as the effective date of your payment. Typically, it takes the IRS 5 to 7 business days to post this payment to your account. Your confirmation number is {redacted}. If you would like a paper receipt, please visit www.pay1040.com and select the Payment Verification option located under Taxpayer Tools at the top of the page.
Using my desktop version of TurboTax as example, when you get to the deductions and credits section there's a topic for "Estimated and Other Taxes Paid". When you select the Estimates button it asks for the total amount paid in each quarter. You don't have to tell it how or where - just how much and when. That's for estimated taxes paid in advance of filing.

For taxes due when you file, just tell TurboTax you'll send a check, then log into the IRS.gov web site and select Make a Payment. Choose Pay by Card, where you choose a payment processor. With ACI Payments, for example, they have "Form 1040 series" in the personal section. Under 1040 you can pick "1040 Current Tax Return - Tax Year 2021". At that point you just enter the dollar amount you owe.

If paying by debit card with a fixed balance that's less than what you owe, don't forget that the processing fee comes out of the same fixed balance. You can only pay the balance on the card less the processing fee, rounded down to whole dollars. I have to make multiple payments because the gift cards available to me have a maximum value of $1K, so I can pay only $997 per transaction. I put the remaining 50¢ on my Amazon gift card account. (You have to add the GC to Amazon as a payment type, first.)
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

yobery wrote: Tue Mar 15, 2022 11:04 am Which exact dropdown selection are you using, to pay for TY2021 in mar/apr 2022? I have to make 3 payments to the IRS. Was thinking extension, but when you say "current year payment" which selection is that from the dropdown? Thanks!
The UI is going to depend on the processor, but you should be able to select between Form 1040 and Form 1040-ES. The former will give you the option for paying 2021 taxes.
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yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

drk wrote: Tue Mar 15, 2022 11:25 am
yobery wrote: Tue Mar 15, 2022 11:04 am Which exact dropdown selection are you using, to pay for TY2021 in mar/apr 2022? I have to make 3 payments to the IRS. Was thinking extension, but when you say "current year payment" which selection is that from the dropdown? Thanks!
The UI is going to depend on the processor, but you should be able to select between Form 1040 and Form 1040-ES. The former will give you the option for paying 2021 taxes.
Alrighty. Is extension bad to use in some way? I guess to make 3 payments I either have to use multiple processors, or multiple payment type selections from the dropdown. Always have paid via ACH on the IRS site, so this is new for me, and I really appreciate the input
robbierob03
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Re: Primer on Paying Taxes With a Credit Card

Post by robbierob03 »

yobery wrote: Tue Mar 15, 2022 11:35 am
drk wrote: Tue Mar 15, 2022 11:25 am
yobery wrote: Tue Mar 15, 2022 11:04 am Which exact dropdown selection are you using, to pay for TY2021 in mar/apr 2022? I have to make 3 payments to the IRS. Was thinking extension, but when you say "current year payment" which selection is that from the dropdown? Thanks!
The UI is going to depend on the processor, but you should be able to select between Form 1040 and Form 1040-ES. The former will give you the option for paying 2021 taxes.
Alrighty. Is extension bad to use in some way? I guess to make 3 payments I either have to use multiple processors, or multiple payment type selections from the dropdown. Always have paid via ACH on the IRS site, so this is new for me, and I really appreciate the input
As I understand it we can file Form 4868 twice per processor, same as any other IRS payment. The conventional wisdom is to wait until the extension payments hit your IRS.gov account before submitting your return, or if you don't have an online IRS.gov account wait at least a week.

For full disclosure though I've never made more than one Form 4868 payment in any given tax year. So if there are other potential pitfalls you'll have to wait for others to chime in.
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

yobery wrote: Tue Mar 15, 2022 11:35 am Alrighty. Is extension bad to use in some way? I guess to make 3 payments I either have to use multiple processors, or multiple payment type selections from the dropdown. Always have paid via ACH on the IRS site, so this is new for me, and I really appreciate the input
Nothing wrong with an extension payment, just depends on your filing needs. Also, YMMV on whether a processor actually enforces the two-payment limit.
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SnowBog
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Re: Primer on Paying Taxes With a Credit Card

Post by SnowBog »

Wannaretireearly wrote: Mon Mar 14, 2022 11:01 pm
spammagnet wrote: Mon Mar 14, 2022 10:24 pm
Wannaretireearly wrote: Mon Mar 14, 2022 10:05 pm... Help me figure out the best way to do this thru turbo tax. ...
Please elaborate on what you mean by "thru turbo tax".

You may find you get more suggestions if you change the tone of request. It sounds like you expect others to plan it for you..
Thanks. Sorry for the tone. Just typing fast between errands, I apologize if this came across harsh.

I’ve done my taxes thru TurboTax online. That’s not going to change at this point. So I’ll be using payment options, credit card etc, thru TurboTax.

I’ve signed up for credit card rewards many times, but have never contemplated paying taxes on credit card.

I just tried applying for a chase card and it seems I’ve reached their limit. I may look for hotel points/cards. Given how much I will charge I wonder if there are cards where charging the full 20k on one card would give extra benefits. Like the southwest companion benefit. Thank you 🙏
I don't believe you "need" to pay through TurboTax. You can pay through anyone you want.
yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

drk wrote: Tue Mar 15, 2022 3:03 pm
yobery wrote: Tue Mar 15, 2022 11:35 am Alrighty. Is extension bad to use in some way? I guess to make 3 payments I either have to use multiple processors, or multiple payment type selections from the dropdown. Always have paid via ACH on the IRS site, so this is new for me, and I really appreciate the input
Nothing wrong with an extension payment, just depends on your filing needs. Also, YMMV on whether a processor actually enforces the two-payment limit.
So just try to push a third extension payment and see what happens? 🤯
drk
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Re: Primer on Paying Taxes With a Credit Card

Post by drk »

yobery wrote: Tue Mar 15, 2022 5:50 pm So just try to push a third extension payment and see what happens? 🤯
Be the data point you wish to see! I've never made extension payments, just 1040-ES and regular 1040, but I'm pretty sure that I made three payments with payUSAtax in one quarter before.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

yobery wrote: Tue Mar 15, 2022 5:50 pm
drk wrote: Tue Mar 15, 2022 3:03 pm
yobery wrote: Tue Mar 15, 2022 11:35 am Alrighty. Is extension bad to use in some way? I guess to make 3 payments I either have to use multiple processors, or multiple payment type selections from the dropdown. Always have paid via ACH on the IRS site, so this is new for me, and I really appreciate the input
Nothing wrong with an extension payment, just depends on your filing needs. Also, YMMV on whether a processor actually enforces the two-payment limit.
So just try to push a third extension payment and see what happens? 🤯
If it fails, use another processor?
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Data point: Visa gift cards recently purchased from Simon Mall using a Bank of America Customized Cash Rewards card did not code as online. That conflicts with information presented earlier in this topic. The merchant description is "Miscellaneous and Specialty Retail Stores" which makes sense, but the "Online Purchase" field is N. Perhaps B-of-A got wise and filtered out SImon Malls?

Not getting the 3% kickback for Simon Mall now means buying gift cards from another vendor in smaller denominations. That means more purchase fees and more transactions at the tax payment processors, the result being higher costs, more effort and being restricted by transaction limits.

Large kickbacks from BA are the only reason I bother doing this. Does anyone have another source of gift cards that can be bought online (or at a grocery store) in large denominations? If not, it's not worth my effort. I'll bag it and go back to having Fidelity withhold FIT when withdrawing IRA funds.
calwatch
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Re: Primer on Paying Taxes With a Credit Card

Post by calwatch »

spammagnet wrote: Wed Mar 16, 2022 8:06 pm Data point: Visa gift cards recently purchased from Simon Mall using a Bank of America Customized Cash Rewards card did not code as online. That conflicts with information presented earlier in this topic. The merchant description is "Miscellaneous and Specialty Retail Stores" which makes sense, but the "Online Purchase" field is N. Perhaps B-of-A got wise and filtered out SImon Malls?

Not getting the 3% kickback for Simon Mall now means buying gift cards from another vendor in smaller denominations. That means more purchase fees and more transactions at the tax payment processors, the result being higher costs, more effort and being restricted by transaction limits.

Large kickbacks from BA are the only reason I bother doing this. Does anyone have another source of gift cards that can be bought online (or at a grocery store) in large denominations? If not, it's not worth my effort. I'll bag it and go back to having Fidelity withhold FIT when withdrawing IRA funds.
The only ones which are sold to the general public are at the $500 level at drug stores and grocery stores from Vanilla or Metabank. If you need $1,000 it's Simon or bust. Historically, I primarily used one of my CCRs on $6.95 Vanilla Visas or Secure Spends from CVS, because they allow you to purchase four ($2,000 total plus $28 or so in fees) in one trip, although your ID will be scanned and captured to make sure you don't purchase more than $2,000 per 24 hours.
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

calwatch wrote: Thu Mar 17, 2022 2:16 amThe only ones which are sold to the general public are at the $500 level at drug stores and grocery stores from Vanilla or Metabank. If you need $1,000 it's Simon or bust. Historically, I primarily used one of my CCRs on $6.95 Vanilla Visas or Secure Spends from CVS, because they allow you to purchase four ($2,000 total plus $28 or so in fees) in one trip ...
Thanks. I need to pay ~$2.5K/q so, at $500 max per card, that's $35 to buy them and $12.50 to pay (5 transactions). I had expected to pay $~30 to buy 3 (2 transactions/q) and ~$7.50 to pay (3 transactions/q).

My plan was to pay alternating amounts of $3K and $2K per quarter, to minimize the number of cards and transactions, netting $506/year. Buying $500 cards, I'll pay $2.5K per quarter and net $484/year. Not a lot different considering that it's free money, I guess. But I can't do it all from my desk and am disappointed by having jumped through some hoops to qualify for $1K Simon cards only to find they don't qualify for the online category.

Had I known Simon cards wouldn't qualify I would have taken the CVS gift card approach from the start. I have to pick up prescriptions periodically, anyway. The gift card purchase amount being about the same as BA's quarterly limit, setting one card for use as "drugs" is still optimized.
... your ID will be scanned and captured to make sure you don't purchase more than $2,000 per 24 hours.
The transaction limit at Simon also being $2000, I gather that's a regulatory limit related to money laundering. Compliance with those regs is why Simon requires you to make an initial purchase at a mall so they can capture your ID. Being near a Simon mall, that wasn't much effort for me but buying cards at CVS is simpler.
international001
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Re: Primer on Paying Taxes With a Credit Card

Post by international001 »

calwatch wrote: Thu Mar 17, 2022 2:16 am
The only ones which are sold to the general public are at the $500 level at drug stores and grocery stores from Vanilla or Metabank. If you need $1,000 it's Simon or bust. Historically, I primarily used one of my CCRs on $6.95 Vanilla Visas or Secure Spends from CVS, because they allow you to purchase four ($2,000 total plus $28 or so in fees) in one trip, although your ID will be scanned and captured to make sure you don't purchase more than $2,000 per 24 hours.
Last year I purchased vanilla cards online and they didn't qualify as online purchase.
If you purchase them at CVS they are marked as pharmacy purchase?

I'm thinking about using my BoA cash rewards with platinium honors if I set up the category as ' drug stores'. For each $500, I earn $500-$5.95-1.99%+5.25% = $10.35 (couting card fee, IRS processor fee and rewards). If I can get 6 cards (I understand I can pay each of the 3 IRS payers twice with credit card), its $62.1 of easy money
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

international001 wrote: Thu Mar 17, 2022 6:47 pmIf you purchase them at CVS they are marked as pharmacy purchase?
The category isn't "drugs", it's "drug stores", and it's an easy test. Buy a gift card using a credit card set to drug stores. Check your account on BA to see how they code it. I suspect it will get a 3% bonus.
Nyc10036
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Re: Primer on Paying Taxes With a Credit Card

Post by Nyc10036 »

international001 wrote: Thu Mar 17, 2022 6:47 pm
calwatch wrote: Thu Mar 17, 2022 2:16 am
The only ones which are sold to the general public are at the $500 level at drug stores and grocery stores from Vanilla or Metabank. If you need $1,000 it's Simon or bust. Historically, I primarily used one of my CCRs on $6.95 Vanilla Visas or Secure Spends from CVS, because they allow you to purchase four ($2,000 total plus $28 or so in fees) in one trip, although your ID will be scanned and captured to make sure you don't purchase more than $2,000 per 24 hours.
Last year I purchased vanilla cards online and they didn't qualify as online purchase.
If you purchase them at CVS they are marked as pharmacy purchase?

I'm thinking about using my BoA cash rewards with platinium honors if I set up the category as ' drug stores'. For each $500, I earn $500-$5.95-1.99%+5.25% = $10.35 (couting card fee, IRS processor fee and rewards). If I can get 6 cards (I understand I can pay each of the 3 IRS payers twice with credit card), its $62.1 of easy money
Last year I bought some eGift cards on giftcards.Kroger.com and they coded as online shopping and not as groceries.
eGiftCards purchased on Raise.com also codes as online shopping.
calwatch
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Re: Primer on Paying Taxes With a Credit Card

Post by calwatch »

international001 wrote: Thu Mar 17, 2022 6:47 pm Last year I purchased vanilla cards online and they didn't qualify as online purchase.
If you purchase them at CVS they are marked as pharmacy purchase?

I'm thinking about using my BoA cash rewards with platinium honors if I set up the category as ' drug stores'. For each $500, I earn $500-$5.95-1.99%+5.25% = $10.35 (couting card fee, IRS processor fee and rewards). If I can get 6 cards (I understand I can pay each of the 3 IRS payers twice with credit card), its $62.1 of easy money
Yes, if you buy them at CVS then it counts as a drug store, regardless of cost. If you buy Secure Spends they are treated as debit cards so your profit is actually ($506.95 * 5%) - $2.50 unload cost - $6.95 card cost = $15.90 a card. So slightly more profitable (if you do $2,500, the last $35 would of course only earn 1.75%, so your profit is $75).
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Halfvolley
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Re: Primer on Paying Taxes With a Credit Card

Post by Halfvolley »

spammagnet wrote: Wed Mar 16, 2022 8:06 pm Data point: Visa gift cards recently purchased from Simon Mall using a Bank of America Customized Cash Rewards card did not code as online. That conflicts with information presented earlier in this topic. The merchant description is "Miscellaneous and Specialty Retail Stores" which makes sense, but the "Online Purchase" field is N. Perhaps B-of-A got wise and filtered out SImon Malls?

Not getting the 3% kickback for Simon Mall now means buying gift cards from another vendor in smaller denominations. That means more purchase fees and more transactions at the tax payment processors, the result being higher costs, more effort and being restricted by transaction limits.

Large kickbacks from BA are the only reason I bother doing this. Does anyone have another source of gift cards that can be bought online (or at a grocery store) in large denominations? If not, it's not worth my effort. I'll bag it and go back to having Fidelity withhold FIT when withdrawing IRA funds.
I just had pretty much the same experience. I went through the hoops of qualifying for the $1k Simon card online purchases, and then purchased $2k in cards with a BOA visa set for "online purchases' as the 3% (5.25%) category. It did not register as an online purchase; therefore, I'm only getting 1.75% cashback.
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Halfvolley wrote: Fri Mar 18, 2022 8:34 amI just had pretty much the same experience. I went through the hoops of qualifying for the $1k Simon card online purchases, and then purchased $2k in cards with a BOA visa set for "online purchases' as the 3% (5.25%) category. It did not register as an online purchase; therefore, I'm only getting 1.75% cashback.
From my subsequent reply...
spammagnet wrote: Thu Mar 17, 2022 8:45 am... My plan was to pay alternating amounts of $3K and $2K per quarter, to minimize the number of cards and transactions, netting $506/year. Buying $500 cards, I'll pay $2.5K per quarter and net $484/year. ...
I realized the benefit of doing it with smaller denomination cards is still pretty good. I have to pick up prescriptions, anyway, so it's not additional effort. It just annoys me that I went to the effort of setting up the Simon account, for nought.

BTW, prepaying prescriptions in the CVS or Walgreens app using a card set as online gets 3%, and the transaction goes faster at the drive-thru window.
JackoC
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Re: Primer on Paying Taxes With a Credit Card

Post by JackoC »

Halfvolley wrote: Fri Mar 18, 2022 8:34 am
spammagnet wrote: Wed Mar 16, 2022 8:06 pm Data point: Visa gift cards recently purchased from Simon Mall using a Bank of America Customized Cash Rewards card did not code as online. That conflicts with information presented earlier in this topic. The merchant description is "Miscellaneous and Specialty Retail Stores" which makes sense, but the "Online Purchase" field is N. Perhaps B-of-A got wise and filtered out SImon Malls?
I just had pretty much the same experience. I went through the hoops of qualifying for the $1k Simon card online purchases, and then purchased $2k in cards with a BOA visa set for "online purchases' as the 3% (5.25%) category. It did not register as an online purchase; therefore, I'm only getting 1.75% cashback.
Yes, sadly BOA CCR/Simon opportunity seems to be gone. Two $2k orders with different CCR's in early January got 5.25% back. The one I did Mar 3 on a third CCR card only got 1.75%.

I've actually gone back and forth in my mind on whether ~$45 per card net cashback (5.25% CB, Simon's fees w/50% sale, processors' ~$2.5 per payment) on ~$997.5 est tax payment vs. ~$8 net I'd get paying est tax with BOA 2.625% credit card, $37 per card pickup, is actually worth the time ordering the card, looking out for the delivery, activating, paying est tax one card at a time, monitoring IRS website that it showed up (one time it never did, and was a hassle to get my money back, minus the $2.55, from PayUSATax)... but it was hard to stop. :happy If now it's a matter of $500 cards (with higher % fees) BOA isn't going to bounce back as not qualifying for the 5.25%, I probably I won't, but I'll keep an eye out for good suggestions.

BOA cashback at Platinum Honors is an excellent deal. I don't feel that bad if they rein in stuff like this. I got several $100 out of it since last year. I'll move on. :happy
mogg
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Re: Primer on Paying Taxes With a Credit Card

Post by mogg »

Any thoughts on using the Upgrade debit card for 1% cash back? https://www.upgrade.com/rewards-checking/

Seems similar to the discover 1% debit card.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Tue Mar 15, 2022 11:10 am
Wannaretireearly wrote: Tue Mar 15, 2022 10:43 am
drk wrote: Tue Mar 15, 2022 10:36 am
Wannaretireearly wrote: Tue Mar 15, 2022 8:34 am Is there a guide on how to manage the tax payment via irs.gov, while still submitting the tax return thru TurboTax? I feel a little uncomfortable doing that. Apologies if this is rehashing earlier posts/material. Appreciate the help!
When you submit the payment through one the IRS's processors, you get a 1040-ES. In TurboTax, you go to the Estimated Payments screen and enter the details. That's it.

Note that the processor will take a few days to send the money to the IRS, so wait until your IRS.gov account reflects the payment before filing.
Thank you, drk!
This is an excerpt from a payment I made last night. (Emphasis added)
Thank you for using Pay1040’s Online Payment Service at www.pay1040.com. This email confirms that your federal tax payment was received and processed by PAY1040 on 3/14/2022 9:42 PM CT. The IRS will use this date as the effective date of your payment. Typically, it takes the IRS 5 to 7 business days to post this payment to your account. Your confirmation number is {redacted}. If you would like a paper receipt, please visit www.pay1040.com and select the Payment Verification option located under Taxpayer Tools at the top of the page.
Using my desktop version of TurboTax as example, when you get to the deductions and credits section there's a topic for "Estimated and Other Taxes Paid". When you select the Estimates button it asks for the total amount paid in each quarter. You don't have to tell it how or where - just how much and when. That's for estimated taxes paid in advance of filing.

For taxes due when you file, just tell TurboTax you'll send a check, then log into the IRS.gov web site and select Make a Payment. Choose Pay by Card, where you choose a payment processor. With ACI Payments, for example, they have "Form 1040 series" in the personal section. Under 1040 you can pick "1040 Current Tax Return - Tax Year 2021". At that point you just enter the dollar amount you owe.

If paying by debit card with a fixed balance that's less than what you owe, don't forget that the processing fee comes out of the same fixed balance. You can only pay the balance on the card less the processing fee, rounded down to whole dollars. I have to make multiple payments because the gift cards available to me have a maximum value of $1K, so I can pay only $997 per transaction. I put the remaining 50¢ on my Amazon gift card account. (You have to add the GC to Amazon as a payment type, first.)
This is great, detailed info spammagnet. Thank you! :sharebeer

1. I have a new Wells Fargo card. 2% cash back, plus $200 after spending $1000.
- I think my first move should be to call them as a heads up roughly $20K will get charged on this card, and confirm 0% interest for up to 12 or 15 months. I may just carry this balance for a while, don't see why not.

2. I will make the payment, as you mention above, thru pay1040.com as they seem cheapest at 1.87%.

3. I will tell Turbotax I'll send a check & file (after I get some kind of confirmation on step 2?).

4. I'm done?

Should I try to get this done next few days, rather than delaying any further and getting too close to April 18th?
Anything else I should consider? I was tempted to just pay the 2.49% fee thru Turbo Tax, but the process above seems easy/simple enough.

Thank you again!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

"Death and taxes. Only one is under your control!"

You can influence both.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Sun Mar 27, 2022 9:44 pm "Death and taxes. Only one is under your control!"

You can influence both.
:beer
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Sun Mar 27, 2022 7:50 pm... Should I try to get this done next few days, rather than delaying any further and getting too close to April 18th? ...
Yes. Don't let yourself get in a jam because a bureaucracy didn't work as quickly as you hoped. And, if you're carrying it as a 0% balance, there's no benefit to delay, is there?
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whodidntante
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Re: Primer on Paying Taxes With a Credit Card

Post by whodidntante »

mogg wrote: Sun Mar 20, 2022 12:11 am Any thoughts on using the Upgrade debit card for 1% cash back? https://www.upgrade.com/rewards-checking/

Seems similar to the discover 1% debit card.
I've tried it and it does pay rewards.
Wannaretireearly
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Re: Primer on Paying Taxes With a Credit Card

Post by Wannaretireearly »

spammagnet wrote: Sun Mar 27, 2022 10:16 pm
Wannaretireearly wrote: Sun Mar 27, 2022 7:50 pm... Should I try to get this done next few days, rather than delaying any further and getting too close to April 18th? ...
Yes. Don't let yourself get in a jam because a bureaucracy didn't work as quickly as you hoped. And, if you're carrying it as a 0% balance, there's no benefit to delay, is there?
Thanks I’ll go to the payment site and charge the card tomorrow!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
spammagnet
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Re: Primer on Paying Taxes With a Credit Card

Post by spammagnet »

Wannaretireearly wrote: Sun Mar 27, 2022 10:22 pmThanks I’ll go to the payment site and charge the card tomorrow!
As you mentioned earlier, forewarn the bank so the charge isn't declined. They don't need to know what it's for - only that it's going to happen and that it's you. Your most recent statement will have the details about the 0% promotional APR.
FullsideCoverman
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Re: Primer on Paying Taxes With a Credit Card

Post by FullsideCoverman »

While reading back through this thread, I came across something I didn’t realize before. Apparently, you can make multiple payments for Form 4868: Extension of Time to File. Am I understanding this correctly?

The context for me is that I usually use IRS Direct Pay to send a (overly large) payment from my bank account for Form 4868, and then get a tax refund in I-Bonds. This year, I have a couple of $800 Visa gift cards (from rebates.) If I can make multiple payments for Form 4868, then I send two payments from two different processors for Form 4868 using up my Visa gift cards, and then also make my usual payment for Form 4868 with IRS Direct Pay, and get my usual I-Bonds. Would this work?

And when I file my tax return, would I just add up all the multiple payments I made with Form 4868 (via credit/debit card and ACH Direct Pay) and put the sum into Form 1040, Schedule 3, Line 10? Has anyone else done this?
yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

FullsideCoverman wrote: Tue Mar 29, 2022 12:08 am While reading back through this thread, I came across something I didn’t realize before. Apparently, you can make multiple payments for Form 4868: Extension of Time to File. Am I understanding this correctly?

The context for me is that I usually use IRS Direct Pay to send a (overly large) payment from my bank account for Form 4868, and then get a tax refund in I-Bonds. This year, I have a couple of $800 Visa gift cards (from rebates.) If I can make multiple payments for Form 4868, then I send two payments from two different processors for Form 4868 using up my Visa gift cards, and then also make my usual payment for Form 4868 with IRS Direct Pay, and get my usual I-Bonds. Would this work?

And when I file my tax return, would I just add up all the multiple payments I made with Form 4868 (via credit/debit card and ACH Direct Pay) and put the sum into Form 1040, Schedule 3, Line 10? Has anyone else done this?
I have made 2 payments so far via processor 1 on 4868, both showed up at IRS online. I plan to make at least 2 more at processor 2.
calwatch
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Re: Primer on Paying Taxes With a Credit Card

Post by calwatch »

I made six payments for Form 4868 ($497 and change each to use up Visa gift cards), as I've done the last few years to get my annual I Bonds. No issues.
Fpdesignco
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Re: Primer on Paying Taxes With a Credit Card

Post by Fpdesignco »

whodidntante wrote: Mon Mar 25, 2019 6:46 pm
tfb wrote: Mon Mar 25, 2019 3:04 am
whodidntante wrote: Sun Mar 24, 2019 4:50 pm For federal taxes you can find the fees for different processors here.
https://www.irs.gov/payments/pay-taxes- ... debit-card
Do you have to give your Social Security Number to the third-party processor? If filing jointly, do you have to give both SSNs to the third-party processor? Any security/id theft concerns?
Your SSN is how the payment is unambiguously attributed to you in the simple system the IRS uses. If you forget your social security number, you can always look it up in the Equifax data breach. :twisted:

So the one thing to understand here is understand for state payments typically they only attribute the payment to the primary (first) SSN listed. I found this out the hard way after 9 months I got a letter from Missouri claiming I owed taxes. In short my spouse and I were both listed in the payment but they only applied it to my social and not my “joint” account for our “joint” return. It’s a common problem for state, and recommend after you make your payments you make sure your state applies it to your joint return if that’s your intention.
phisher4
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Re: Primer on Paying Taxes With a Credit Card

Post by phisher4 »

I apologize if this was mentioned elsewhere, but I cannot find the answer for the life of me:

Are the fees associated with credit card payments deductible (i.e. can you deduct credit card fees from pay1040 or other payment processors from your tax return from the current or following year)?
phisher4
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Re: Primer on Paying Taxes With a Credit Card

Post by phisher4 »

I apologize if this was mentioned elsewhere, but I cannot find the answer for the life of me:

Are the fees associated with credit card payments deductible (i.e. can you deduct credit card fees from pay1040 or other payment processors from your tax return from the current or following year)?
yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

phisher4 wrote: Sun Apr 03, 2022 1:47 am I apologize if this was mentioned elsewhere, but I cannot find the answer for the life of me:

Are the fees associated with credit card payments deductible (i.e. can you deduct credit card fees from pay1040 or other payment processors from your tax return from the current or following year)?
If you itemize
SnowBog
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Re: Primer on Paying Taxes With a Credit Card

Post by SnowBog »

phisher4 wrote: Sun Apr 03, 2022 1:47 am I apologize if this was mentioned elsewhere, but I cannot find the answer for the life of me:

Are the fees associated with credit card payments deductible (i.e. can you deduct credit card fees from pay1040 or other payment processors from your tax return from the current or following year)?
I'm not sure about the "payment" fees... But in a more generic view, it appears under current law, only self-employed (or similiar) can deduct tax preperation fees. https://www.thebalance.com/tax-preparat ... on-3192843

Given the high standard deductions - that was my guess anyway, as far fewer people "itemize" deducations under current law. But from skimming this article (and another), it seems like the law actually changed so tax-prep is no longer deductable for "employees" - or that's how I read it...
yobery
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Re: Primer on Paying Taxes With a Credit Card

Post by yobery »

While the IRS does not charge a fee for using credit or debit cards to pay federal taxes, the credit card companies do. The IRS said the convenience fees are a miscellaneous itemized deduction.

https://www.jklasser.com/askjk/i-paid-a ... -this-fee/
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