Comments on: How (and why) to pay your taxes with a credit card in 2021

By: Alan

Alan — Tue, 02 Mar 2021 02:45:08 +0000

In reply to Yu. Yes, it is two times per processor. Be aware that this is not per month but rather per form. So if you are making estimated payments - 1040 ES, you can only make two per quarter per processor, not two per month. I can confirm that this works as I made 4 payments in January for the 4th quarter 2020 estimated taxes. If you want to pay in April at the same time filing is due, you can again only make two payments per processor. The lag time is about a week. When you make the charge, it will take 2 - 3 days to no longer show as pending. At that point you can make a payment but that may take 2 - 3 days to post. I did exactly this in January in order to make multiple payments on the same cards. I have used two cards:

Fidelity 2% cash back
Chase Freedom Unlimited 1.5% cash back

I justify the Chase card because I can transfer the points to my Sapphire Reserve and use them to Pay Myself Back for grocery store and restaurant purchases with a 50% discount on points which equates to a total cash back of 2.25%. This promotion is good until the end of April so for now it still makes sense.

By: Alan

Alan — Tue, 02 Mar 2021 02:31:46 +0000

It really sucks that Pay1040 raised their fee – last year they were charging 1.87% which made even my 2% cash back card from Fidelity worthwhile. This year I have been putting more on my Chase Freedom Unlimited and then immediately using the points through my Sapphire Reserve to pay myself back for groceries and restaurants. At least that way I am getting the equivalent of 2.25% cash back but the pay myself back is scheduled to end in April. Most interesting is how much my FICO scores changes when I max out both cards in a single month – I have seen it drop from 824 to around 700 until the cards are paid off and then it goes back up.

By: James

James — Mon, 01 Mar 2021 12:23:52 +0000

Since this article is from Mar 2020, it needs to be updated. pay1040 is now 1.99% for credit cards which makes the cheapest fee 1.96%.

By: Lori

Lori — Tue, 10 Mar 2020 20:22:28 +0000

Due to our business, we sometimes have a large estimated tax payment, or a paymensmt that may equal $10,000 or so. I have the Chase Ink business card that earns 5x points at office stores,so I’d purchase the cards there.
What would be my best strategy from which cards to purchase and how many, to who to make the payment(s) with. Sorry for my ignorance, I’m just confused! I’m a points hoarder and I want to earn the points, but not end up paying more in fees than what it’s worth.
Thank you for any step by step guidance anyone is able to provide!

By: Rick

Rick — Tue, 10 Mar 2020 17:49:50 +0000

How do you come up with 2.25% back when pooling Chase cards? If you earn 1.5% on the Freedom card and transfer points to the Sapphire Reserve card they’re still only worth 1.5% right?

By: RC

RC — Tue, 10 Mar 2020 16:11:37 +0000

Beware, while you quoted a 1.87% fee for Pay1040, you may pay much more if using popular tax software. For example, if using H&R Block Tax Software you pay a 2.49% fee with Pay1040. Surprise!

By: TXOil

TXOil — Tue, 10 Mar 2020 13:43:02 +0000

In reply to J. Galt. Yes, it works. Verified.

By: Martine

Martine — Thu, 11 Apr 2019 21:16:40 +0000

In reply to Nathan. Can you use unlimited debit cards or are you limited to 2 per 1040 form (like the limit on credit card charges)?

By: Nathan

Nathan — Thu, 11 Apr 2019 21:08:04 +0000

In reply to Martine. I think most (all?) payment providers allow 2 per quarter. IRS has no limit. So, if you used 3 different providers you could submit about $3,000 in payments per quarter based on $500 gift card value.

By: Jesse

Jesse — Wed, 10 Apr 2019 15:35:37 +0000

In reply to ssss. I'm in the same position! Curious about the answer to this.