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Get 2.63% Cash Back on IRS TAXES (really!)

Johns Wu Posted in Credit Card Deals by Johns Wu
January 1, 2008 12:57 PM - 15 Comments

Pay your taxes this year with a rewards credit card, and you can EASILY get 2.63% cash-back. This is probably one of the sweetest tax tips I’ve come across in 2008!

Here’s an overview of how it works.

Frequently Asked Questions
1) Is it safe to pay with Official Payments – or – PAY1040?
Yes, Official Payments is an authorized IRS payment provider since 1999, and PAY1040 is officially endorsed by H&R Block.

2) Is there a limit on how much cash-back I can get?
No! That’s whats sweet about this deal. Even if you’re Donald Trump and you pay $1,000,000 in income taxes, you will still walk away with a net 2.63% profit.

3) 2.63%?? How does the math work out?
Let’s say you owe the IRS $10,000 and you pay online. Since these online payment processors charge a 2.49% fee, your total payment to them comes out to $10,249. Pay this amount with your cash back credit card and you get 5% of $10,249 cash-back ($512.45).

$512.45 – $249 = $263

Therefore, you get about a 2.63% rebate on your taxes. Cool huh?

4) What if I overpay my taxes (on purpose) to get more cash-back?
Hmmm….. That is an interesting question! I suppose you will get a lot more cash back, and you will eventually get your overpaid amount back from the IRS, but this may be a little be TOO “creative” in the eyes of the government.

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Comments (15)
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  1. g said:
    on February 6th at 08:19 pm

    …all purchases. Citi card may not consider this a purchase, watch.

  2. rick said:
    on February 6th at 09:23 pm

    could you file using a service like turbotax, to pay your taxes?

    if so, perhaps you can bypass the 2.49% fee and just pay whatever turbo tax costs.

    That is if you can use a credit card as a form of payment to the IRS through turbotax.

    then it would be a between whichever is cheaper the 2.49% or the turbotax fees.

    thats my $0.02

  3. uhh said:
    on February 7th at 08:07 pm

    rick: this is talking about the tax *money* you owe, not the cost of submitting your tax documents. and bankaholic people – this is basically straight from mymoneyblog.com – feel free to give them some credit.

  4. rick said:
    on February 8th at 04:23 pm

    I assumed that was what i wrote, as I will owe. I’m quite sure that you can pay turbotax folks via credit card just to file or use their software, but i owed last year as well, and i didn’t remember if they (IRS or turbotax ) gave you an option to pay via Credit cards or not. *shrugs*

    If they allow you to make the tax payment you owe via crecit card using one of the tax prep companies is the real question.

  5. David said:
    on February 8th at 05:19 pm

    I think Turbotax uses Official Payments for people that want to pay with a credit card, thus you would have to pay the 2.49% fee anyways.

    Beware that Citicard might not consider this a purchase but rather more something of a cash advance. In that case they would not give you the 5% and you would still get stuck with the 2.49% fee!! This is too risky for me.

  6. jim said:
    on February 9th at 05:15 am

    this sounds really shady, i wouldn’t advise doing something like this…

  7. NT said:
    on February 11th at 10:02 pm

    paying taxes does not appear to be eligible for this – it only applies for purchases and advances

  8. John said:
    on February 28th at 05:16 am

    If you overpay IRS they send you back your money + 6%. It turns out to be a really good investment !

  9. Peter said:
    on February 28th at 08:50 pm

    What is a good credit card to get these days? It will be my first credit card.

  10. Dan the plumber said:
    on February 29th at 10:56 pm

    Capital One credit card are a good one which gives the 1% cashback

    plumber

  11. Jason said:
    on March 24th at 06:43 pm

    Not worth the risk if Citi considers this a cash advance.

  12. Jim said:
    on March 29th at 04:41 pm

    Pay1040 website FAQs states:

    Will I be charged a cash advance fee?
    No, your tax payment will be treated like a retail purchase and not a cash advance.

  13. Bill said:
    on April 28th at 07:06 pm

    I used the Citi bank card to pay my taxes……worked very well got the 5% cash back card……paid my taxes got 21/2% return…..

  14. JOE said:
    on July 12th at 01:15 pm

    OK WAIT A MINUTE!! you will have 30 days or less after paying the taxes, then your CARD co. will require you to pay the whole 10249 or suffer CREDIT CARD interest on that amount @ upto 40%. So unless you have lots of cash laying around your GUNNA TAKE A BIG HIT!!! So Watch it my friend, (always look at the whole picture). OK groan about what i said but its true never the less :) hava good day, be smart :)

  15. naga said:
    on October 6th at 04:30 am

    BTW party is over. Citibank no longer offers 5% card. Love to hear nay other card that doe it as I have large property tax bill

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