If you’re like me and have to pay taxes beyond what was withheld from your paycheck, you’re dreading tax time. Rather than get mad about it, I wanted to turn the situation into a positive. So, I wanted to pay taxes with credit card… for a profit. And not just any card will do.
Pay Taxes With Credit Card
Here are the simple steps to pay taxes with credit card and turn a profit.
First off, you need to owe taxes. If you’re getting a refund, congratulations… now adjust your W-4 to get that money into your paycheck every week instead of letting the government use your money for free!
Now that you owe taxes, you need the right card. I used my Barclay Arrival card that provides 2.10% towards travel on every purchase.
Go To Pay1040.com
The Federal government allows you to pay taxes with credit card at 3 different websites. I went with the cheapest option at 1.87%.
Since I was paying my personal Federal taxes, I selected the “Form 1040 Series” option, although there are plenty of other types of taxes you can pay on this site.
Select Your Tax Form
As you start the pay taxes with credit card process, the website asks you to pick with type of tax form you are paying. For me, it was a personal return, form 1040, and for the tax year 2016.
Enter Your Personal Information
Once you’ve selected which tax form you want and for which year, next you have to enter your personal information. You’ll enter your name, address, social security number, etc. so that the website can properly attach your payment to your tax profile with the IRS.
Choose the Right Card to Pay Taxes
Because the processing fee to pay taxes with credit card is 1.87%, you don’t want to make paying taxes any more painful than it has to be. So, choose a card that provides rewards that are greater than this fee.
Confirmation Before You Pay Taxes With Credit Card
As with any online purchase with a credit card, you’ll have one last chance to make sure all of the information is correct before finalizing the purchase.
You will notice that Pay1040.com cannot issue refunds. Inspect this page VERY carefully.
Print Your Receipt
After you pay taxes with credit card, you’ll want to print out and save the PDF of your receipt.
Notice that there is no need to mail in a payment voucher (Form 1040-V). The IRS will match your credit card payment with your tax return.
The payment will process immediately, but it may take 5-7 days for the IRS to post your payment to your tax account. Don’t worry…. the IRS will apply the payment to your account as of the date that the transaction was authorized and completed.
The Bald Thoughts
With the right credit card, I took a normally painful situation and turned it into a positive. My credit card pays me 2.10% while I paid a fee of 1.87%, which netted me a profit of 0.23%. According to The Motley Fool, the average taxpayer owes over $9000 in taxes. If you paid this amount with your Barclay Arrival credit card, you’d profit an easy $20. Looks like lunch is on Uncle Sam!