The Chase Freedom card is currently offering 5x/5% on PayPal transactions for the second quarter. If you need to pay federal income taxes then PayUSAtax.com allows PayPal payments. The fee is 1.97% ($2.69 minimum) so if you did the $1,500 maximum you’d end up paying $29.99 in fees and you would earn 7,500 Chase Ultimate Rewards points. How useful this method will depend on whether you need to pay any federal income taxes and also if you can max out the category without this method. Grocery stores are another option as well. Personally I’d wait until later in the quarter before resorting to a 1.97% fee but some people might just want to do it now to get it over with.
Hat tip to reader Lorem Ipsum
Will post the same here as I did on the PayPal Key page. I paid my taxes using pay1040.com. I entered the PayPal Key linked to my freedom card and it processed as a debit card. Fee was only $2.58 for $1500 total transaction.
Oh, this page is old lol
Hi checking in if you received the 5X bonus by using key and posting as a debit card?
this is really good to know 🙂
This deal might now be dead. Just paid estimated taxes yesterday and got a note from PayPay that the tax portion would code as PAYUSATAX and the convenience fee would code as PAYPAL *PAYUSATAX.
Previously, both coded as PAYPAL *PAYUSATAX.
That suggests the tax payment itself will post as a purchase. My statement doesn’t close for a couple of weeks, so I won’t know for sure until then.
Any other data points?
Why do you need to wait until your statement closes? I can see the point earnings on chase.com as soon as the purchase posts.
What did it end up being posted as?
FWIW, I made a <$200 payment on 6/15. Both the payment and the fee posted as PAYPAL *PAYUSATAX and earned the full 5x. But I did have a transaction last month in which I checked out through PayPal, and it just posted as the organization I was paying, with no record of PayPal (and no 5x points).
just paid, both coded as PAYPAL *PAYUSATAX
So if you owe taxes >1500, can you split up payment over multiple payments?
A couple other people have asked this question, and I believe the answer is that you can make 2 separate payments (for your annual Form 1040 payments). See https://payusatax.com/IRS/Home/LoadStaticPage?pageName=FAQ#17 and https://payusatax.com/IRS/Home/LoadStaticPage?pageName=FAQ#14 .
Thanks!
$1500 isn’t very much. I’ll probably do that just with PayPal charges for other things. Probably pay my taxes with my Amex Blue Business Plus, and get 2X MR’s which are worth quite a bit….
Can we still pay tax via payusatax, if we use tax software? I mean do I not have to pay it via turbo tax or tax act if they are my tax softwares? Please clarify, how that works..
Your tax software probably has an option to tell the IRS that you’re mailing a check. I believe I used that option in 2015 (using H&R Block website) and paid my taxes separately through pay1040 later. H&R Block refused to confirm that I could do that, but I never had any problems. This year, I filed using Tax Slayer, and they did confirm that if I e-filed stating I would pay by check, I could then use any of the debit/credit card payment options on the IRS website.
Thanks
If you had to pay taxes, the comparison would be going to a grocery store and paying $5.95 + $2.58 for a $500 card. This is what I will use my Discover on (since I always owe plus want to max out my I Bond allocation for the year). So you save $4.50 doing the two step vs directly paying. I’ll probably just use Freedom on eBay purchases and maybe go with paying estimated tax in June if I have to.
Say I owe the IRS $5000. After I pay $1500 + $1500 = $3000 through PayUSATax / PayPal, how should I pay the remaining $2000? Should I just send a check of $2000 along with a 1040-V for $2000?
Break even point is $6,000 payment in tax
Anything above that and you are losing money on fees
Why not just do Paypal Checkout for a kiva loan, that way it is free, and you get the repayments in less than the year it would take to get the tax refund. Just a thought.
Risk of default
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I just used pay1040 yesterday… but $1500 doesn’t help anyways. I owe IRS 10k, so…
If you have CIP you can use plastiq and pay. The fee with Plastiq is 2.5% but you will get 3% back on CIP so it will be a small saving in that case.
Please explain what CIP is, thank you.
What’s CIP?
Chase Ink Preferred.