I had to start RMDs from my IRA this year and as a result have much higher income taxes, both federal and Taxifornia. I pay my taxes by credit card and the best I have so far is the 2.625% rebate from my BofA credit card. This makes me about 0.75% for payments at pay1040.com and 0.325% for CA payments.
What are some opportunities for making more money back on my tax payments?
BTW, I play the credit card signup bonus game so I am infinity/24 but still have an ~800 credit score. I am open to suggestions for other possible signon bonuses.
A great way to earn a few bucks is to take advantage of category bonuses on Chase Freedom, Discover It, and Citi and buy $500 VGC and burn them on taxes. These are debit payments and the cost is around $2-$3 per card unloaded. You can do $3,000 per estimated tax period and $3,000 for an extension (form 4868) for a total of $15,000 unloaded this way; more if you call in to Official Payments and unload multiple cards in one transaction. You are limited to two payments per processor, so six total. I underwithhold my taxes at work and pay estimated taxes for this reason, although not to the $15,000 max. The same goes for the Simon $1,000 cards, which can be unloaded this way but don’t provide category bonuses.
Paypal also takes taxes from PayUSATax and so when the Paypal category rolls around, that’s an easy way to get a 3% delta on tax payments. Also, taxes on credit card signups. Even with the base fee, it is slightly cheaper to unload $500 cards on taxes than to pay taxes directly (a fee of $8.95 - $6.95 for the card and $2 to unload, compared to $9.45 when a $500 payment is directly made) but I save unloading for grocery store promos. I used to unload office store Mastercards on Plastiq but that is gone in eight days.
c[quote=“calwatch, post:3, topic:3606”]
great way to earn a few bucks is to take advantage of category bonuses
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I’ve been paying my estimated tax payments on Citi Double Cash cc for years. I realize I pay the extra charge for using CC to pay taxes. But, nice to get that extra CASH in hand every month or so.
He means if you use your credit card to buy $500 Visa/MC gift cards, then use the gift cards to pay your taxes, you can make 6 $500 payments per period. It’s actually less costly this way (roughly 1.5% net fees), than paying directly with a credit card. And using gift cards expands the possibility of earning category-specific bonus cashback (like, grocery or drug stores) you otherwise wouldnt.earn when paying the tax bill with the credit card directly.
Grocery stores such as Safeway have discounts for Visa/MC gift cards from time to time, typically more than the activation fees.
Do not buy multiple cards without testing them first. There was a time when Visa GC did not work with Official Payments. Recently the MC GC from Safeway (giftcardmall) did not work with PayUSAtax and Pay1040 as debit cards.
I’ve actually never done it personally, only read about it. 2020 is going to be the first year I use the strategy fully since Plastiq on MCGC is no longer an option.
Nothing published. I mean, if you do not recycle your line you should be fine.
Now if you DO recycle your line, I dunno at what point they might begin to scream and howl . . . . or even close you down.
On cards I had that were closed down, I was not recycling my line. But I was repeatedly spending right up TO the line . . . and they nailed me and shut me down just as if I were a mangy dog.
More on topic for this thread:
I will be paying my quarterly tax shortly with my Alliant Visa card with the 2.5% reward. I posted over on the Alliant thread the statement closing dates for this year. Luckily our Alliant statements will close one day before tax is due. So not only will we recoup a small percentage after paying the fee, but we also will be able to leave our payment money in the bank, collecting interest, for very nearly one extra month. Sweet!
I paid my quarterly tax with my Citi Double Cash 2% card yesterday. Sure wish I could get the Alliant Visa 2.5% card. They turned me down last year. Think I’m going to give it a try again soon.
I can see them objecting to recycling but spending to the line??
Anyway, I applied for the Alliant card. They did not approve immediately but are considering it. As Imentioned in the OP, I have a high credit rating but many applications.
They give a phone number questions on the application and if they do not approve I may call to plead my case.
Argyll is the expert on this around here, not me. But I believe his guideline calls for going no more than half way on a regular basis. This if my memory serves, which it might not. It has been a while.
Anyway, I am no longer maxing out credit lines anywhere, I can tell you that. It’s bad totem.
I apologize ahead of time since I know this is a trivial question. However, I was unable to find recent information when I did a search here in FD… Does any one know whether Chase considers the purchase of an Amazon $500 GC as a cash advance (or is it processed as any other merchandise purchase)? I’m inadvertently short to meet a bonus requirement.
–TIA
