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How I Made Money Paying My Taxes

The right credit card can make paying taxes profitable.

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It is said that death and taxes are the two constants in life. Although none of us like paying taxes, it’s something that we all must do. As a small business owner, I’m always looking for ways to maximize every dollar that I spend. And I became excited once I learned how to earn credit card rewards for a profit when paying my taxes.

How to Pay Taxes With a Credit Card

Because I’m in business for myself, I pay estimated taxes once a quarter since I don’t have a regular paycheck that withholds taxes automatically. Instead of writing a check or having taxes deducted from my checking account, I choose to pay taxes with a credit card to earn cash back, miles and points.

>>TAX HACK: How to Get a Cash Bonus With Your Tax Return

The IRS allows taxpayers to use these three websites to pay federal taxes for a small fee. Here are the fees charged for debit or credit card transactions:

WebsiteDebit CardCredit CardPayments Accepted$2.551.96%


(min $2.69)

Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, Accel, PayPal
Pay1040.comPersonal cards $2.58


Others 1.99%
(min $2.58)



(min $2.58)

Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE$2.00 for $1,000 or less


$3.95 over $1,000



(min $2.50)

Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, (Digital Wallets for Visa, Mastercard, American Express); Pay With Cash, PayNearMe

Paying through one of the tax payment services above is not the same as paying your taxes when filing your returns through online tax services. Those fees are higher (2.35% to 3.93%) and can make this an unprofitable transaction.

How to Make Money Paying Your Taxes

Making money by paying your taxes is a simple equation. Since credit card processing fees are about 2%, you’ll make money when you use a credit card that earns more than that.

My Alliant Cashback Visa® Signature Credit Card earns 2.5% cash back on every purchase. By paying my taxes using that credit card at one of the sites above, I’m earning over 0.50% on every tax payment.

Let’s assume that you owe $10,000 to the IRS. Using the Alliant Cashback Visa Signature Credit Card, you’ll earn 2.50% cash back while paying 1.96% in fees to PayUSAtax.

$10,000 Taxes Owed 
Alliant CU Cash Back$250
PayUSAtax Fees$196

Best of all, the credit card processing fees are deductible on your business taxes. So, you’ll earn even more once you claim these expenses on your tax returns.

Which Credit Cards Should You Use To Pay Taxes

You’ll make money paying taxes when you use the right credit cards. The profits can come based on the earnings rate of the card or by meeting the minimum spending requirements on a new credit card.

Credit Cards That Earn More Than 2%

By selecting a rewards credit card that features a higher base rewards rate, you can maximize return value on any tax-related payments you make.

Welcome Bonus

Many welcome bonuses are high enough to offset the fees charged when paying taxes with a credit card. Visit our roundup of the best credit card bonus offers to consider if you want to learn more. 

What To Watch Out For When Paying Taxes With A Credit Card

Paying taxes with your credit card can be profitable, but it isn’t always the right move. Here are a couple of scenarios to watch out for:

  1. Paying Interest On An Unpaid Balance. If you don’t pay the balance in full by the due date, you’ll owe interest on the payment. The interest rates on credit cards are high and will offset any rewards you’ve earned.
  2. High Utilization Rate Can Lower Your Credit Score. When you authorize a large transaction on your credit card, it can lower your credit score if your balance gets too close to your credit limit. This can affect your ability to get approved for a loan or it can result in a higher rate.
  3. Higher Fees Than Rewards. Make sure that you use the right card when paying your taxes. If the rewards aren’t valuable enough, you’ll pay more in fees than the value you receive.

Read More About Tax Preparation:

While we work hard on our research, we do not always provide a complete listing of all available offers from credit-card companies and banks. And because offers can change, we cannot guarantee that our information will always be up to date, so we encourage you to verify all the terms and conditions of any financial product before you apply.

Lee Huffman
Lee Huffman
Lee Huffman spent 18 years in banking and investments and now uses that insider knowledge to write about credit cards, travel, and other personal finance topics. Lee enjoys showing people how to travel more, spend less, and live better through the power of travel rewards. You can connect with him at

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