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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?
6
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 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 3/24/13 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 3/25/13 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.
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