Well, folks—2024 has come and gone. Aaaand, few things are as sure as…
…taxes. 🫠
Nothing kills the joy of January quite like a giant tax bill. But before you start rage-closing all your tabs, hear me out: there’s a way to make paying taxes a little less painful—maybe even enjoyable!
That’s because, if done correctly, your tax payment could earn you enough points for a free vacation, a fancy hotel stay, or even a lie-flat business-class flight.
Let’s break it down step by step.
Step 1: Understanding the Fees
Yes, you can pay your taxes with a credit card, but there’s a small catch: the IRS charges a processing fee. The fee varies slightly depending on the payment processor you use, but it’s usually between 1.75% and 1.85% of your total payment. For simplicity, let’s round that up to 2% for our calculations.
Let’s say you owe $10,000 in taxes. Paying with a credit card means you’ll fork over an extra $200 in fees. Not exactly thrilling, right? But in the right circumstances, that fee can be well worth it.
Here’s how.
Step 2: Use a Credit Card With a Welcome Offer
Many travel credit cards offer massive welcome offers, but they often require a decent minimum spend. If you’ve been eyeing a premium card but hesitated because of the spending requirement, your tax bill might be your golden ticket.
For example, if a card requires $8,000 in spending to earn its welcome offer, paying your $10,000 tax bill means you’ll hit the bonus in one fell swoop.
Let’s say that welcome offer is worth 75,000 points, and the points alone are worth at least $750 in travel. Suddenly, paying a $200 fee doesn’t seem so bad when you’re getting way more value in return.
Want to take this up a notch? Split your tax bill across multiple cards that each have their own welcome offer. If two cards require $4,000 in spending for their offers, you could earn over 150,000 points just by paying your taxes. That’s enough for a round-trip business-class flight to Europe. 🤯 Sign me up!
Step 3: Maximize Everyday Earning Rates
Already have a credit card and not looking for a new one? You can still make tax payments work in your favor by using a card with high earning rates.
Some travel credit cards earn 2x or more per dollar spent on all purchases. So if you put $10,200 (your tax bill plus fees) on a card that earns 2 points per dollar, you’d rack up 20,400 points—enough for a free one-way flight to Europe (via Flying Blue, for example).
Suddenly, that $200 fee turns into a ticket that could be worth $500+ in travel.
Not a bad trade-off.
Step 4: Actually Paying Your Taxes With a Credit Card
Ready to put this strategy into action? Here’s how to pay your taxes with a credit card in just a few minutes:
Choose a Payment Processor – The IRS works with third-party payment processors, including Pay1040, ACI Payments, and PayUSATax. Each has slightly different fees, but all hover around 1.75%-1.85%.
Pick the Right Credit Card – Use a card that either helps you hit a welcome offer or earns high rewards on all purchases.
Submit Your Payment Online – Go to IRS.gov, select your payment processor, and follow the steps to enter your credit card details.
Wait for Points to Post – Most credit card issuers post rewards within a few days of the transaction.
Redeem Your Points for Travel – Transfer your points to airline partners, book a flight, or put them toward a future hotel stay.
Step 5: Decide If It’s Worth It
Is this strategy for everyone? Not necessarily. But if you:
Have a big tax bill
Want to earn a lucrative welcome offer
Value travel rewards and can maximize them
…then paying taxes with a credit card could be a game-changer.
Even if you’re just earning standard points, the value of the flights or hotels you book could far exceed the small processing fee you pay.
Making the Most of Tax Season
No one likes paying taxes, but at least you can make it a little more rewarding. Whether you’re earning a welcome offer or racking up points for your next trip, this is one of the rare times when spending money on taxes can actually work in your favor.
And hey—if it gets you a free vacation or a fancy schmancy business-class seat, that $200 processing fee suddenly doesn’t feel so bad.
Now go forth, pay your taxes, and start planning your next trip. You’ve earned it. ✈️
