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I just got an email from the guy that does my taxes and it makes me wish I lived in Switzerland, because it might just be cheaper and they have better chocolate. If you find yourself owing taxes this year, take solace in the fact that you can earn some extra miles paying it.
Credit card processing fees are high at 1.87 – 2.35% but some people might find it worthwhile if it helps them meet spending requirements. Plus, paying taxes online is a much easier (albeit more expensive) option than getting a prepaid card involved. Since tax payments don’t fall into any kind of bonus category, they earn the standard payout, which can still be lucrative with the right credit card:
Another way to maximize your tax payment is to charge it to a credit card that earns a spending bonus in the form of extra points, elite status, or a companion pass. The great thing about focusing your spend on one of the cards listed below is that you’ll not only earn at least 1 point per $1 spent, but you’ll get closer to a reward that will hopefully improve your travel experience in the future:
American Express Premier Rewards Gold Card:
Hawaiian Airlines World Elite MasterCard
Hawaiian Airlines Business MasterCard
United MileagePlus Explorer Card
Virgin Atlantic MasterCard
British Airways Visa Signature Card
Southwest Rapid Rewards Premier Credit Card and Southwest Rapid Rewards Premier Business Card
Virgin Atlantic MasterCard
Citi Executive AAdvantage Card
Delta Reserve Credit Card
Barclay AAdvantage Aviator Silver World Elite MasterCard
Virgin Atlantic World Elite MasterCard
Hyatt Visa Signature Credit Card
Marriott Rewards Premier Visa
Ritz Carlton Rewards Card
You can purchase an Amex gift card online, earn cash back and rewards, then use the gift card to pay your taxes. The great thing about this is that the 1.5% cash back from Top Cash Back largely off-sets the credit card processing fee. Use the Barclay Arrival Plus World Elite Mastercard to purchase your gift card and you’ll earn 2.2% in travel rewards cash, leaving you with a profit.
On a similar note, Redbird is offering a $20 bonus for depositing your tax return into your Redbird account. This won’t affect your $5,000 monthly loading limit.
If you’d rather not shell out hefty fees for credit card payments but still want to earn rewards, you can opt to pay your taxes with a rewards debit card like the one issued by UFB Direct, which earns 0.5 AAdvantage miles per $1 spent. You’ll earn fewer rewards, but you will also pay a much lower processing fee of $2.49 – $3.50 per transaction as opposed to 1.87 – 2.35%.
These are just a few options for paying your tax bill this year. So put your rose colored glasses on and be happy that when the government uses your hard-earned cash to pave roads, fund research on the migration patterns of sea turtles and the education of underachieving students who don’t care, at least you’ll get a vacation out of it eventually.
I don’t quite understand the Redbird section. Is this using your RED balance to make a tax payment? Doesn’t that charge like an AX credit card?
Also, for the $20 promo, I got it by splitting my return w/my normal account. $1 was sufficient to get the bonus. Also, I believe the direct deposit monthly limit is separate from the cash load monthly limit.
Yep, you’re right. I updated the section since it kind of deviated from the point.
how do you pay california taxes with credit card? any particular website that you like that has low fees?
There are tons of options, outlined here. Official Payments handles credit card transactions, for which it charges a 2.3% fee. You can also send a payment via money order.
“I just got an email from the guy that does my taxes and it makes me wish I lived in Switzerland, because it might just be cheaper and they have better chocolate.”
True, but the Cali sunshine all year around is worth at least 5x the Swiss chocolate, not to mention the fact that you’d get Redbird nostalgic and get misty-eyed when seeing some random red & white traffic sign that’d make you think of Target 😛
Yeah, that’s true. I’ll consider it the Redbird tax. 🙂