Another tax season is upon us. Paperwork, endless tax forms and if you aren’t lucky enough to get a tax refund, your payment to the IRS is already due. Let’s figure out how you can pay your taxes with your credit card and earn rewards during the process.
The Different Ways You Can Pay Your Taxes
There are a variety of different ways one can pay federal taxes to the Government. The IRS authorizes three different companies to accept payments on its behalf via debit or credit card. Although, these companies are allowed to include “convenience fees” on these tax payments if you are looking to earn a large bonus and meet certain minimum spending requirements it may be worthwhile to pay your taxes via a payment service, even when adding a small percentage to your overall balance and payment.
Debit Card Payment
When you pay with your debit card, a flat fee is added on to your payment, which is generally around $2.60 and $3.95, depending upon which payment processing company you utilize and — in the case of one specific payment service— whether the payment to the IRS is larger than $1,000. Using your debit card is always an effective and cheap option, as the payment charge will never exceed $4. You will also receive an immediate receipt, which can help you get approved for a loan when you’ve reported a tax liability. Unfortunately, there aren’t any debit cards at this time that will offer any type of benefits for this type tax expenses.
Credit Card Payment
Another option to pay your tax liability is by using one’s credit card with an added fee based on a percentage of the amount being paid. At present, those charges are approximately 1.9% to 2% per transaction. These payment processor rates are dependent on the kind of credit card with AmEx cards being charged a relatively more expensive fee.
This can be a really great way to earn frequent flyer miles or bonus points which require a minimum spend within a certain time frame. So for example, if you were looking to earn the 50,000-point bonus with the Chase Sapphire card, you are required to spend $4,000 within a three-month period.
Let’s say you owe the IRS $4,000, you can choose to pay them with your Chase Sapphire card, pay an extra $80 (2% fee) and thus earn the 60,000 bonus miles, worth roughly $650!
For more information how to utilize your credit card spend and earn bonus miles and points please visit, www.getpeyd.com