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Paying my taxes with a credit card
Posted on 3/23/13 at 1:46 pm
Posted on 3/23/13 at 1:46 pm
Finishing up my taxes and I owe quite a bit being that I'm self employed. (Quite a bit in my eyes at least) I have the money in savings and could pay it in cash, but I hate seeing my savings go "poof" with one click.
I'm thinking about applying for a 12 month interest free credit card, paying it with that, and paying the credit card off throughout the year. I figure it won't hurt as bad paying it off in increments, and might as well get some rewards while I'm at it.
Any negative consequences I'm missing with this strategy?
I'm thinking about applying for a 12 month interest free credit card, paying it with that, and paying the credit card off throughout the year. I figure it won't hurt as bad paying it off in increments, and might as well get some rewards while I'm at it.
Any negative consequences I'm missing with this strategy?
Posted on 3/23/13 at 2:15 pm to rintintin
I had no idea paying taxes with cc was an option
Posted on 3/23/13 at 2:22 pm to rintintin
Is IRS going to charge you a fee to pay with cc?
Posted on 3/23/13 at 2:36 pm to yellowfin
Yeah they charge a fee, quite a hefty one actually, like 2.29%. But the credit card I applied for I'll get a good bit in rewards towards airfare or hotels with the amount I'm spending, so it will cancel it out and then some. Basically I'll get a free plane ticket out of the deal.
Posted on 3/23/13 at 2:56 pm to rintintin
Good yo know. I'll do the same I think
Posted on 3/23/13 at 3:21 pm to rintintin
The IRS will take your card but will charge a hefty fee. You might be better off paying from savings, then charge daily expenses on the credit card until you hit the limit. Just save up for the big payoff after 12 months.
Of course, you could do that whether you are paying the IRS or not.
Of course, you could do that whether you are paying the IRS or not.
Posted on 3/23/13 at 3:38 pm to rintintin
I got the Chase Sapphire Preferred for this purpose. I owe $3000 to the IRS. I want a free plane ticket. I'll spend it and then pay it back the next day. Works for me.
Posted on 3/23/13 at 4:21 pm to Cajun Revolution
I would only do it if you get a sign up bonus for the new card.... Or if I have a card where I need to hit a spending threshold for a bonus or waived fee
Posted on 3/23/13 at 5:01 pm to foshizzle
quote:
The IRS will take your card but will charge a hefty fee. You might be better off paying from savings, then charge daily expenses on the credit card until you hit the limit.
This, might as well avoid that 2+%
Posted on 3/23/13 at 6:12 pm to jso0003
quote:
The IRS will take your card but will charge a hefty fee. You might be better off paying from savings
Like I said, I did the math and even with the 2.4 % fee I'll come out on top considering the promotion I get from the credit.card spending x amount of dollars in the first few moths. I'll basically get a free plane ticket despite the fee I will pay.
Posted on 3/24/13 at 1:34 pm to I Love Bama
So this amounts to an after the fact plan for 2012 ? You could have accomplished the same think without the fee or the miles, if you would have made the correct deposits.
What your plan for 2013 ?
Bet you have a balance from 2012 when you file for 2013.
What your plan for 2013 ?
Bet you have a balance from 2012 when you file for 2013.
Posted on 3/24/13 at 2:03 pm to 11thACR
quote:
You could have accomplished the same think without the fee or the miles, if you would have made the correct deposits.
Well I did make the correct deposits, I said I could pay it off in full with my savings. Now I could've avoided it all if I made quarterly payments, but I didn't so here I am.
quote:
Bet you have a balance from 2012 when you file for 2013.
thanks dad
Posted on 3/24/13 at 8:44 pm to rintintin
If you are self employed then you must have a business of some sort right? Plumber, accountant, etc? Why aren't you writing yourself a check from your business to pay your taxes? I have to pay quarterly and write myself a check and call it a distribution since I have an S corp. If your business has no cash, then you may have bigger problems. Paying taxes on a cc seems very desperate to me. What am I missing here?
This post was edited on 3/24/13 at 8:48 pm
Posted on 3/24/13 at 9:31 pm to MadDoggyStyle
Personal trainer actually. What do you mean writing myself a check? I'm contracted through a gym and receive a bi-weekly check for my services, then a 1099 at the end of the year.
As I've said, I've saved for taxes and have enough to pay it in full with cash, but I'd rather have that cash on hand and pay off the cc throughout the year, while also getting rewards for it.
As I've said, I've saved for taxes and have enough to pay it in full with cash, but I'd rather have that cash on hand and pay off the cc throughout the year, while also getting rewards for it.
Posted on 3/24/13 at 9:51 pm to rintintin
quote:
Like I said, I did the math and even with the 2.4 % fee I'll come out on top considering the promotion I get from the credit.card spending x amount of dollars in the first few moths. I'll basically get a free plane ticket despite the fee I will pay.
You realize you can do this anytime of the year? This maneuver has nothing to do with taxes, it's just charging today's expenses and making sure you can pay back after 12 months.
There's no real reason to pay the extra fee.
Posted on 3/24/13 at 10:25 pm to foshizzle
Yes, but again I'd rather have the cash on hand and spread out the payment over the year. The rewards are just an extra perk in this situation.
Posted on 3/24/13 at 10:30 pm to rintintin
You can put a month or two worth of expenses on your credit card and not pay the fee though
Posted on 3/24/13 at 11:11 pm to BACONisMEATcandy
I don't care about the fee, or the rewards for that matter, this is simply a strategy to not have to dissolve most of my savings with one payment.
Posted on 3/25/13 at 8:28 am to rintintin
You might want to try this. Pay with credit card and when the statement comes in pay 1/2 out of savings and pay the balance as soon as you can. You should pay estimates. Estimates should cover the tax due this year. However not to kill your cash flow pay 1/2 of the required amount. This will leave you a smaller balance due next filing season. Then in 2014 increase to 3/4 of the required amount and the full amount in 2015. It will take several years to get into a position of taking care of your financial oblation with less sting on your cash flow. Because cash flow is king in a self-employed business. The penalty for underestimating is not that high. Good Luck.
Posted on 3/25/13 at 9:54 am to Teton Tiger
Great advice, thank you. I told myself I was going to pay quarterly estimates this year (this was my 2nd year self employed so it was my first year eligible to do so), but waiting till the last minute to pay last years taxes meant that I already missed the first quarterly payment for this year, and now the same has happened again this year. My fault for procrastinating. I like your strategy though.
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