Pay Federal tax with a debit card

I found this over on Ken’s website and thought it was interesting.

Axios: A $4.7 million debit charge

The taxpayer made forty-seven grand.

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talk about heavy hitter. I need to up my debit card game. Hell at 4.7MM even a 2.5% card would work well

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The problem you run into w/ credit cards is the limit (vs a debit card) and that you can only make 2 payments per tax processor - for each payment type (Quarterly Est Pmt, Return Due Pmt, etc.).

So assuming you are doing it in 2021, you could do 2x Q4 pmts per processor (total of 6) and 2x Return pmts per processor (total of 6) - for 12 total payments. Depending on your cc limit and your tax bill - if you can get a 1% debit card, you might be better off.

Lessons I learned:

  1. Be VERY careful using PayUSAtax - they are having tough times. My last payment was held back by them for almost a week. They either have no customer service left or are having issues - phone lines auto-hangup after @ 50 minutes, BBB and other reviews are horrible… and corp office will not answer the phone - at all.

  2. If you have a spouse, don’t try to double up by doing payments under their primary SS# - they will be assoicated with your spouse not your joint return and you’ll have to call to get them moved to your joint return. (But then again, maybe that is a back way to do it… they didn’t give me any grief for going over the payment limit by doing this.)

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Good tip about PayUSAtax. 0.3% less doesn’t seem worth the headache to pick the other two. (unless you’re doing paypal)

Only thing I don’t like about Pay1040 is they don’t have acct. payment hx. You need to keep track of CC# etc for look up.

1% debit cards ? Only one I have is Discover and that doesn’t work :frowning:

A couple of links:

The BBB complaints for PayUSAtax. My complaint isn’t up there (PayUSAtax aka Value Payment Systems) hasn’t responded back to me or the BBB), but I guess I should be happy - my payment eventually made (late) it to the IRS. Others weren’t so lucky.

Link for the Jiko … not sure what to call it, since they aren’t a bank (not FDIC insured), but they do promise 1% cash back on debit card transactions and that they will invest all of your money in Treasury Bills. I’m not sure I’m feeling risk-tolerant enough right now to benefit from the Jiko deal… maybe if I only had Diamond Hands.

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On Jiko, I guess you can call it a fintech but since they do own an actual bank so you can’t go wrong either way.

Whether they’re worth it depends on how much you owe the IRS I guess. Definitely worth it at $4.7M. Plus there are other places where you have much lower fees for using debit vs. credit so if you find yourself making a lot of these type of expenses, it may be worth it. I know my utility company and my real estate taxes are one example where debit vs. credit makes a difference and may make it worth forgoing the typical 2% cash back from credit cards.

I may go with them for my real estate taxes honestly. They charge 2.35% if using credit card but 0% for using debit.

I use my Citi Double cc for same. Also use for IRS payment & estimated taxes. This month is a biggee. :blush:

got my Jiko invite, but I’m a bit leary. Any downside risk with THEIR T Bills setup (I know about default fiasco some years go, )

Their other caveat is that they are currently free. But I’ve read that they plan on having a $9/month fee some time in 2021 making the proposition much less palatable. It may still be worth it for some but that monthly fee will offset some of the gains obviously.

I’m with you on being cautious however. I also got my invite but haven’t setup my account yet. I may test the waters first. Since there is no minimum, I think I’ll initially only keep a nominal balance on it until I have a bill I need to pay with it. Then I’ll ACH money and hope everything goes smoothly.

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My concern is giving my money to someone who is brand new at a brand new thing and isn’t known (doesn’t have a long or medium term history) AND isn’t FDIC insured.

We really don’t know much about them and if they were to go away tomorrow, we may not have much we could do to get our money back.

Seems like a high risk for a medium-lowish return to me.

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yes what is the Jiko deposit return exactly?

Are there any other 1% Debit options?

Supposedly insured by SIPC up to $500k.

But the safest options may be to just ACH enough to cover your Debit card charges a few days before you need to make them. That way, outside of those times right before you make payments, you leave very little on the account itself to lose (since there is no monthly fee currently and no minimum balance).

Deposits are invested in T-bills by units of $100 so whatever the T-bills return is basically it as far as I understand.

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So not worth it from a deposit perspective yet https://www.thestreet.com/investing/treasury-bill-rates

Rates are shooting up, if sustained I might move money there IF safe .Currently getting .7% @marcus with referral

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Yesterday was tax payment day for estimated taxes.

I attempted repeatedly to pay using PayUSATax because their service charge is the lowest.

No dice.

There was something wrong with their website.

PayUSATax continues to be listed as a service provider by the IRS. But I have heard bad things about the quality of their service.

Finally, after reloading and making several attempts, I just gave up and used both of the other two services to make my payments. It cost me a small amount of money. But the minimal potential saving at PayUSATax was just not worth the hassle.

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I used them a few weeks ago without any issues. They probably got overwhelmed by procrastinators :smile:

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I handle 3 sets of tax returns and have used all 3 processors without issue. You cannot expect all websites to be up 24x7. Even bank websites can be down when you need to make last minute transfers.

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As a data point, I used Jiko for both my 2021Q1 estimated tax payment as well as a 2020 extension payment so I can later request $5K in I-bonds with my 2020 return. Used payUSAtax for a $2.55 fee per payment. No issues.

I recommend that you DO NOT use Paytaxusa for last minute payments.

Speaking from experience, if they screw-up and accidently hold your payment for nearly a week before submitting it to the IRS and showing it was then made past the deadline - Paytaxusa won’t help and will in fact tell you to fight it on your own with the IRS.

Think you’ll call Paytaxusa? Wrong, I tried calling them and several of their different phone numbers. They have a sweet hold system that auto-hangs up on you after a set period.

Don’t believe me - https://www.bbb.org/us/tn/nashville/profile/tax-return-preparation/value-payment-systems-llc-0573-37034425

I’m not saying don’t use them… I’m just saying you had better be prepped for something to go wrong if you use Paytaxusa and IRS payments are something I’d rather have done right. (Especially where there are other companies to use.)

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I just used them to pay my taxes via Jiko and did not run into any issues with how promptly they submitted the payment to the IRS. That said, since I was 3 weeks ahead of the deadline, I didn’t risk much either if they had a slight delay.

But back to Jiko, they notified me that the paying of IRS taxes with 1% cashback was ending on May 29th Announcement here. May be enough time to make second quarterly tax payment but it’s too bad that they won’t keep it going after that.

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