No Money To Pay Taxes? This May Help…
When I graduated from college, I got a job and spent every penny I had. Hey, those skis weren’t going to take themselves down that hill. Someone had to buy them, along with a plane ticket, lodging, and lift ticket to get them down the slopes. That person was me.
When tax time came, I wished I had that thousand bucks to pay The Man, man. Turns out the IRS doesn’t care about my Rossignol Make-A-Wish outreach program. The Taxman wants to get paid – now. Lemme tell ya. Nothing makes you feel all grows’d up like explaining to your folks that their college graduate was actually stupid and then striking a deal with them to bail you out.
PayUSATax allows you to “Pay personal and business taxes by credit or debit card”. There is a convenience fee of 1.87% if you use a credit card and $2.79 if you use a debit card. Generally speaking, both of those options are a waste of money. For every $1,000 paid in taxes with a credit card, they take another $18.70 scoop in convenience fees.
But… here are 5 Ways using a card can be a GOOD idea:
- It is not a cash advance. So if you are tapped out, but know you are going to have money to cover it later, you could slap it on a card that has a 0% introductory interest rate for 12-18 months. Then pay the card off when you have the cash. Consider Citi Simplicity (18 months), Chase Slate (15 months), Citi Thank You (15 months), Discover it (14 months), and Chase Ink Cash Business (12 months).
- If you have a credit card that pays you 2% in cash back or rewards (Citi Double Cash Card or Fidelity Amex), you’d actually profit $1.30 per $1,000 paid.
- Using a card might be worth it for the convenience and knowing the payment got there. The IRS considers it paid when you charge the payment.
- You can make partial payments on more than one card. This is handy in case you have different airline, hotel and rewards cards. This way you could top off those accounts to get to the next level for a free flights, hotel stays, and what-have-you.
- You can pay someone else’s taxes with your card. Maybe you need to meet a big spending requirement to get a sweet, tax-free credit card bonus. Some of my personal favorites: Chase Sapphire, Ink Bold, and Ink Plus come to mind. With those cards, it would be worth paying someone’s taxes + the convenience fee. They write you a check for what they owed the IRS. You eat the $18.70 convenience fee per $1,000 in tax.
Click on “Chip’s Favorite Credit Card Offers” at the top right side of this website for up-to-date deals, terms, and conditions on these cards and more. Email me if you have any questions about which card might be right for your situation.
For example, right now with Chase Sapphire Preferred’s personal credit card sign-up bonus for new cardmembers, you can earn 40,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. Get a card for an authorized user and you’ll get an extra 5,000 bonus points. Those 45,000 bonus points alone can be redeemed for $450 in tax free cash. Plus you’d get 4,000 more points, redeemable for $40, for spending $4,000. Just like that, you have points redeemable for $490 in tax free rebate cash!
If you used PayUSATax to pay $4,000 in taxes, they’d tack on $74.80 in fees. You’d meet the Sapphire spending requirement instantly and still be ahead of the game $415.20 – tax free! ($490-$74.80). That’s a pretty good reason to use a credit card to pay your taxes.
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