How to Pay Taxes With a Credit Card and Earn HUGE Rewards

How to Pay Taxes With a Credit Card and Earn HUGE Rewards

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Benjamin Franklin famously said in this World nothing can be certain except Death and taxes and indeed when you get Paid as an employee the government takes Their share or if you're self-employed Don't worry the government will still Get their money you'll just be paying it To them yourself relax pay your income Tax yeah relax guys it's just taxes and You'll get that money back through all The great government services that you Have access To Now being self-employed in addition to Giving you certain tax benefits like Structuring your company as an escort to Avoid Social Security taxes on a lot of Your income which is a perfectly legit Strategy used by even the president of The United States God Save the Queen man But in addition to all that paying taxes Yourself also gives you the ability to Pay your taxes with a credit card to get Even more value in the form of credit Card rewards that is one way you can Make the US tax system work in your Favor and in this video I want to go Through a complete guide of how to pay Taxes using a credit card and to give You several strategies that I have used To earn huge rewards like free business Class flights five-star hotels Etc now Paying taxes with a credit card does Have fees but with the right strategy

That I'm going to show you you will be Able to get way more value back in Credit card rewards than you are paying In fees and this video is brought to you By Aura but more on that later so it is A temporary regulation that came into Effect in 1999 that has authorized the IRS to accept credit and debit cards but We use the term temporary lightly Because it's still in effect 25 years Later and how do we actually pay the IRS What we owe with a credit card well the IRS doesn't accept payments themselves Since they would then be collecting fees For tax payments and the IRS is is Forbidden by law to collect any fee for Their services so they contract the Service out to these companies that you Will find on the pay section of their Website irs.gov you have pay USA tax pay 1040 and ACI payment for debit cards They all charge a flat fee of just over $2 and for credit cards they charge a Percentage of just under 2% of the Payment okay as you can see here pay USA Tax is the cheapest at 1.82% then we have some other services That you can use if you don't want to Use the three official ones one of them Is plastic which has been around for a Long time and enables you to make tax Payments they actually send a check on Your behalf after you have paid them With your credit card for a while they

Stopped accepting American Express but As of 2024 they do accept AMX again for Payments in the US and Canada plastic However has a higher fee of 2.9% so Under most circumstances it's going to Be cheaper to use one of the three Official ones there are only a couple of Situations where plastic may make sense One is to pay your state taxes if you Live in a state that doesn't have a Credit card tax payment system or does But it charges a fee of more than 2.9% Or if you've accumulated a load of Fee-free dollars by referring other Users you get $2,500 fee free dollars For each person you refer who makes a Qualifying payment when we say to $ 2,500 fee free dollars we don't mean They are giving you $2,500 okay that' be A lot just for one referral um but you Get the right to send $2,500 with no 2.9% fee and the more Referrals you do the more this adds up So you can see in my account here I want To send this $8,900 New York state tax payment and I'm using my fee free dollars to get a Complete discount on the 2.9% fee and Just pay pay a $149 delivery fee for the Check going to the NY tax department Through the mail so if you have an Online following you may be able to do a Load of referrals and build up a load of Fee free dollars but even if you don't

If you only owe a few ,000 in taxes well You get $2,500 fee free dollars per one Referral anyway so if you just referred One or two people let's say two people You can send 5 grand for free maybe that Covers it then in addition there is Another similar service called IO and They send checks on your behalf too and You can pay any vendor with them for the Same 2.9% fee as plastic but for most People unless you have a way to get the Payment for free or if it's for state Taxes your best bet is paying through One of the three IRS official vendors on Their site now let's get to the juicy Part what rewards can we earn and do They cancel out the fee and earn us even More rewards on top but first have you Ever Googled your name or email and been Shocked to see your personal information Available to anyone searching there are Companies out there called Data Brokers That collect and sell your information To spammers scammers hackers or anyone Who may want to Target you your name Home address health records relatives Things you purchase it's all out there For anyone to find and buy your Information floating around the web can Put you at risk especially during tax Season when scammers are known to file Fraudulent claims with your readily Available personal information last year The IRS flagged 2.4 million tax returns

With refunds totaling roughly $13.8 Billion for possible identity theft I.E People trying to steal your tax refund And that is one of the many reasons why I have been a long-term user of Aura the Sponsor of today's video Aura monitors The web 247 to see which data Brokers Are selling my information and then Automatically submits requests on my Behalf to remove me from those lists Cleaning up my information not only Reduces the amount of spam I get but it Protects me from hackers who could use This type of information to help them Access my social media accounts bank Accounts or other sensitive data with Aura you also get credit monitoring Antivirus VPN password management Parental controls identity theft Monitoring insurance and more all in a Single app at one affordable price you Might already have one or even a few of These tools but not having all of them Is like locking the front door and Leaving the back door wide open so Protect yourself and don't get scammed This tax season go to aura.com Ben Hedges to start your twoe free trial of Their service it's also linked in the Description below okay so the first Thing we need to point out is that if You just use a standard Rewards Card Like a 2% cash back card such as the City double cash you earn 2% in rewards

Which simply cancels out the almost 2% Fee that you would pay with the official IRS payment services let's say you used Pay USA tax the cheapest one at 1.82% you would be earning 0.18% so $18 cents for every $100 you Paid on a tax bill of $10,000 that would Be just $18 in rewards after accounting For the fee I guess it would still be Worth it to do it just for the Convenience and you got 18 bucks maybe You could get a pizza or something with That but we are looking for something Bigger now one point about the double Cach though is that since the rewards Can be converted into points you could Say they take on more value say a Minimum of 2 cents per point if you're Going to transfer them to Airlines and Book business class flights so that gets Us to 4% back on our spending so Accounting for the fee we would now be Earning 2.18% but it's risky since there's no Guarantee you'll be able to get that Value so we need something that offers a Lot more of a certain reward let's first Look at welcome bonuses so credit card Welcome bonuses are where a card offers You a certain amount of points or cash Back for spending a set amount of money In your first few months of card Membership for example 50,000 points for Spending $4,000 in your first 3 months

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Now this obviously needs to be a new Card although in some cases if you had a Card that was about to renew around tax Time and you called up for a retention Offer which is a bonus if you keep the Card open another year they may give you A similar thing but normally a smaller Amount like spend $1,000 get 10,000 Points that could be a way of offsetting The fees too but let's focus on welcome Bonuses so in the past I have got the 880,000 point bonus on the MX business Gold the 150,000 Point bonus on the MX Business platinum and the 990,000 point Bonus on the chase Inc unlimited all Through paying taxes actually with the Business gold a funny thing happened I'm Going to be paying that on my brand new American Express business gold card this Is the first ever purchase on this card And it's going to be $21,000 which is Crazy all right hopefully MX will Approve it and the next day they phoned Me up and said um sir we noticed a large Transaction um are you going to be Paying that off I guess it's because it Was my first ever transaction on this Card and I charged $21,000 it kind of Spooked them anyway I did immediately Pay it off so the AMX was happy and Since I spent $21,000 I earned the 80,000 Point bonus Which had a $10,000 spending threshold But I also got points on the spending at

A rate of 1 Point per dollar so I earned 21,000 points to which took me to 101,000 AMX points which has a minimum Value of $1,111 since I can cash those points out For 1.1 cents per Point using the Charles Schwab MX Platinum so if we Deduct the roughly 2% fee I paid which Would be around $420 we are left with a Profit of $691 in reality my profit was way more Than that since I Ed the points for Business class flights at a much higher Value probably around 2 cents per point But you know we'll just go with a Conservative estimate on the business Platinum I also paid $21,000 and I earned $150 for the bonus But also 1.5 points per dollar on Transactions over $5,000 on that $21,000 Or so I paid so I earned 32,000 points Taking me to a total of $182,000 that has a value of $202 if you cash it out at 1.1 cents per Point through the Charles Schwab Platinum then minus the $420 fee that Takes us to $1,592 in profit now that card does have A $695 annual fee but I got a lot of value Back from using the $400 Dell credit on Things I would have bought anyway so if We want to be really strict let's work Out the effective annual fee that's $695

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Minus $400 = 295 then we deduct 295 from Our profit of 1,582 and that gives us 1,287 in fact even if you count the Entire $695 annual fee we are still at $887 in Profit but then I usually don't cash out The points anyway I redeem the through Airlines at much higher values so our Profit would actually be even higher now Let's give an example of that cashing it Out through an airline and a very clear Example is on the chase Inc unlimited Last year which is a no annual fee Business credit card I got a welcome Bonus of 990,000 points and then I used 60,000 of those points to book a United Polaris business class flight from London back home to New York I got $3,686 th000 points I had put a $99,000 Transaction on the card more than I Needed actually since the bonus would Have been triggered when I hit 6,000 so I paid $180 in fees which doesn't even Scratch the surface of the value I got Out of the points so $368 minus 180 in fees is still $3,428 so welcome bonuses are a great Way of getting huge value on your tax Payment last year there was some Uncertainty whether tax payments counted Towards welcome bonus spend with American Express one AMX rep told YouTuber Mark Reese tax payments were

Considered cash equivalent and thus Didn't count but Mark did eventually get His points and there was another MX Member who was in a similar situation And complained to the Consumer Finance Protection Bureau or cfpb and because of That complaint he got his points too so I think this issue is resolved now but If your tax payment doesn't trigger the Welcome bonus just know that you can Complain to the cfpb and you should get A resolution but welcome bonuses are Only for new card members what about Existing cards in your wallet is there Any way to earn enough rewards on your Tax payment that it totally offsets the Fee you pay and provides positive value On top of that yes there is so a card I Often like to use for my tax payments is The Hilton Honors surpass card which Earns a Hilton free night when you spend Over $155,000 on purchases in a calendar Year cool thing about Hilton free nights Is that they can be used at almost any Hilton even the really high-end ones Like Waldorf aoria and Conrad as well as Boutique hotels from the lxr hotels and Resorts collection the oceanana Santa Monica is one such hotel and that one is Currently showing prices at at least $686 per night I success used two free Nights at that hotel and I probably Wouldn't use the free nights below that Rate also Hilton would add a resort free

At that property if you'd booked with Cash which would push it over $700 Actually quite a lot over $700 close to $750 so I value this free night award at At least at least $700 in value if not More so on a $15,000 tax payment we Would earn our free night which I'm Going to say $700 for and then since the Card earns three Hilton points per Dollar on non-category spending that Would be 45,000 Hilton points as well Hilton points are worth 0.6 cents per Point according to the Points Guy so That's going to be $270 in value for the Points add that to our $700 for the free Night and we're at $970 then deduct our 2% fee from the tax Payment which would be $300 and we are Still at $670 in value the key thing With cards that you already have is to Look for cards that provide a benefit For spending a certain amount in a year Like the British Airways Visa signature Card from Chase that card gives you what They call a travel together ticket when You spend $30,000 in a year on the card This gives you a free extra seat when You book an award flight with avios on a Business class or first class booking That could literally provide value of Over 2,000 3,000 or $4,000 or more Depending on the route and it would cost Just $600 in fees for the taxes you had To pay if those numbers are a bit high

For you though I mean it's people with Higher income going to be paying $30,000 In taxes you can do a similar thing with The Alaska Airlines Visa signature card You put $6,000 in a year on that card And you can earn their $99 companion fee Basically you get a $99 extra ticket to Wherever you are flying that would cost You $120 in fees for paying the $66,000 In taxes on the card but you could Potentially save a few hundred on a Plane t on a you know extra fair for Someone sitting next to you depending Where you are going if you were going Transcontinental it could easily be a Few hundred that you'd save so guys Those are just a few ideas basically if You don't have a new card with a bonus Look for a card in your wallet that has A benefit that you only get when you Spend a certain amount of money in a Year it could be a shortcut to an Airline status or a hotel status a hotel Free night Etc you could even get a Brand new card that had a welcome bonus And such a benefit like if you signed up For the Hilton Honors surpass AMX right Now you could get both 155,000 points as A welcome bonus and a free night at a High-end Hilton hotel if you spent $115,000 on taxes also don't forget if You had already spent say $5,000 on the Card you could just pay $10,000 of your tax bill through the

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Credit card payment system and then send In a check for whatever else you owed to Avoid unnecessary fees if you got two New credit cards and wanted to use a tax Payment to get the bonus on each of Those cards you could actually split Your total tax bill into two tax Payments the IRS typically allows two Payments for each type of tax or each Tax form for example the federal 1040 Each year you can look up on this table Um how many payments you can do for each Form that you're paying I'll put a link To this web page somewhere below so guys I hope you've enjoyed this guide to Paying taxes with a credit card it's Been an integral part of my credit card Rewards strategy for many years and will Be into the future and it's a way I've Built up a lot of points for free luxury Travel this year I will be using my Hilton Honors surpass card to get that Hilton free night paying through the Official payment providers and then I May look into getting another credit Card and hitting a welcome bonus with my State taxes paying through plastic to Use up some of my remaining fee-free Dollars so I won't have to pay a fee let Me know what you are doing this year in The comments down below a big thank you To the sponsor of today's video Aura Don't leave your personal information And your tax refund at risk from thieves

Get a twoe free trial of their service With my link down below please subscribe If you're new and we'll see you next Time bye-bye

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