Most people mess this up when paying taxes with credit cards

If you’re planning to pay your taxes with a credit card this year (a few weeks ago we discussed why it’s lucrative to do so), the strategy itself isn’t that complicated. The problem is most people get the details wrong, and that’s what determines whether you come out ahead or just pay a fee for nothing. Before you submit that payment, there are a few things worth knowing.

1. Take Advantage of Payment Limits

One thing most people miss is that IRS payment processors typically allow two payments per processor per period, often per quarter and per SSN. That means you’re not limited to a single transaction. In practice, this gives you flexibility to split payments across multiple cards, which is especially useful if you have multiple $200 Visa/Mastercard gift from the Chase Ink Cash strategy. 

2. Not All Cards Earn Points

Not all cards actually earn rewards on these payments. Some issuers explicitly exclude tax payments or treat them differently than normal purchases. For example, the Robinhood Gold Card does not earn points on tax payments, and typically Amex virtual card numbers don’t either. So don’t wait around to apply and pay last minute - you’ll want the physical Amex card on hand for that.

3. Prevent Cash Advance Fees

Tax payments should count as purchases, but on the rare chance you’re using a card that considers it a cash advance, you’ll want to prevent this to make sure you don’t get charged a fee and interest accrual on day 1. You can call your bank to lower your cash advance limit to $1 so anything over that will get denied - helping you know whether it’s a real purchase or cash advance. Remember, cash advance on cards don’t earn points.

4. Max Float

Looking to overpay on taxes to earn points and extend your float as long as possible? Identify which card will have the statement close right before you pay, then transfer you credit limits from other cards (from the same bank) to that card so you can have a massive credit limit for the maximum days to float the payment. Even better if this is on a 0% APR card.

5. Refund Timing

If overpaying your taxes to earn points, just remember that it’ll take ~2-4 weeks after you file to get that refund check from the government. Be financially responsible!

What’s In our Wallets (Newsletter Exclusive)

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Matthew: World of Hyatt Business | Capital One Venture X

Sarah: Chase Sapphire Reserve | Capital One Venture X

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About WuhooPoints

WuhooPoints focuses on the credit card consultation side of Wuhoo Group. We help you unlock the power of your credits cards for free luxury travel.