Unlock a Sneaky Hack: Why Paying Taxes with a Credit Card is a Game-Changer!

Are you considering paying your taxes with a credit card? It may seem like a tempting idea due to the rewards you could earn, but before you make that decision, let’s weigh the pros and cons.

How Much Does It Cost to Pay Taxes With A Credit Card?

1. To pay the least in fees, you need to make a direct payment using Pay1040 or ACI Payments. If you make a direct payment, you will pay:

• Processor: PAY1040.com
• Consumer: $2.15 for debit card, 1.75% ($2.50 min) for credit card
• Processor: ACI Payments
• Consumer: $2.10 for debit card, 1.85% ($2.50 min) for credit card

Paying through a tax preparation service or software will incur higher convenience fees.

1. The IRS lists the convenience fees for each IRS e-file and e-pay service provider. Here are a few examples:

• PAY1040.com/SpecialOffers/TurboTax: 2.49%, $3.95 minimum fee
• TaxAct.com: 2.59%, $2.99 minimum fee
• Hrblock.com: 2.49%, $2.99 minimum fee
• TaxBandits.com: 2.95%, $0.00 minimum fee

As you can see, using an e-file or e-pay provider can increase the cost significantly.

Should I Pay With a Credit Card?

1. Next, you have to identify a credit card that will give you more rewards than what you pay in fees. Here are a few options:

• Fidelity Rewards Visa Signature Credit Card: Offers 2% cash back with no annual fee or cashback limits
• U.S. Bank Smartly Visa Signature Card: Allows you to earn up to 4% cash back based on your qualifying balance

1. High Welcome Reward Credit Cards: Consider using a credit card with a significant welcome bonus and high initial spend requirement when paying your taxes to soften the impact of the fees.

Reality: It’s Rarely Worth It

Ultimately, it’s rarely worth paying your taxes with a credit card due to several reasons:

• Small bills may not yield significant rewards
• Very few cards offer rewards that exceed the near-2% fee hurdle
• U.S. Bank Smartly card is an exception, but it requires a significant amount of balance
• Consider using a credit card to acquire a welcome bonus quickly

In conclusion, while there may be some benefits to paying your taxes with a credit card, the fees and rewards need to be carefully considered before making the decision.