Paying Estimated Taxes--by credit card or over the phone--Experience?

Parent Cafe
1

Just wondering if anyone here has ever paid taxes by credit card and/or over the phone against their checking account? I have always written a check but dislike that the IRS wants you to write out your whole SSN on your check. We have estimated taxes that we have to pay. I’m leaning toward using a CC, since the “convenience fee” will be 1.87 or 1.88% and the CC will give me back 2%. For the state, you have to pay $1 per payment and use your checking account #.

I’m uncomfortable writing our SSN on our checks. I used to just put our last 4 digits but prefer not to write any of it on our checks, so this is one of the workarounds I’m considering. Anyone have any experience using CC or paying by phone with their checking account #? Thanks! I don’t know which of the CC processors on the directpay.irs.gov website to choose, as I have no experience with any of them.

2

You can go to eftps.gov and set up an account then pay straight from your checking account. That’s how we send the p/r taxes from my office. You register with them and after your credentials are validated then they’ll send you a pin number by mail.

3

We did the same thing through eftps.gov.

4

Yea, I thought of that, but I’ll get a few dollars if I use the credit card. The “convenience fee” is 1.87 or 1.88% and I get back 2%. It’s not a huge amount, but it’s a net gain for me to charge. The “convenience fee” is also an item that can be itemized for tax deductions.

5

I don’t remember I had to do that but I just send in the estimated tax form. But lately due to security issue, I withheld enough money to hat I owe tax, just to the cusp, so if the IRS gave some strangers money, it’s not my fault.

6

I’m sure they will still cash your check if you don’t write the SSN on it. Heck, the IRS even cashes the check when it’s not made payable to it (i.e. when you accidentally mail your state estimate to the IRS.

7

I pay taxes with credit cards often. Easy way to rack up the miles/points, takes just a few minutes. For us, worth the fee.

8

I didn’t write the SS#. They took it no problem.

9

S was grateful when we offered to let him put it on his debit card so he can get miles with the card. There is a convenience fee of under $3, but he feels it is worth the miles he gets from the debit card. We are happy that he will get them and there is no need for us to write checks. This seems like a win-win!

10

I also just started using efpts.gov, both for my estimates and to pay what I owed on my 2014 return.

That’s a pretty low convenience fee though… Citi Cash Visa pays 2% so in theory, if you don’t carry a balance, that would be a good choice.

P.S. you can deduct the convenience fee? Great information…what line is that (I haven’t been asked that in Turbo Tax I don’t think, but maybe as I’ve never used the card to pay)?

11

I am naive to the potential risk of putting the SSN on the check. Doesn’t the IRS know our SSNs and doesn’t the bank know them too? Is the risk of the check getting lost in the mail and in the wrong hands?

12

Theoretically you can deduct the cost of anything you need to pay to file your return: accountant, turbotax, postage, etc. But it’s a miscellaneous itemized deduction and must exceed 2% of your AGI along with other misc expenses. So very few people can.

13

Convenience fee deductibility:

The fee is deductible for personal tax types as a miscellaneous itemized deduction. However, only those miscellaneous expenses that exceed 2 percent of the adjusted gross income can be deducted. For more information, refer to Publication 529, Miscellaneous Deductions.

14

We do itemize most times, as our deductions add up. The small debit card convenience fee may be not worth hassling with, but we will add it to the list of potential deductions and let the CPA figure out what we ought to do.

I guess I don’t like the SSN on checks so that anyone who processes the check (including folks at the bank) has it in view readioybwith our nams and addresses.

15

I didn’t know you can deduct credit fees, what category would they be under?

16

I have to itemize as I’m self employed, business use of home, etc.

@Madison85, I just looked at publication 529 (thank you). http://www.irs.gov/pub/irs-pdf/p529.pdf
Only being able to deduct the portion of the convenience fee that is more than 2% of AGI makes it a nonstarter.

17

Post #15, that’s what I remember.

18

But that goes on schedule C, not schedule A Itemized deductions.

19

Deductions for self employed can be different. You should talk to an accountant.

20

I’ve been self employed for 15 years, I know how to do the taxes. The point is that you can only deduct the convenience fees that exceed 2% of AGI. The cash back on the credit card would have to be much higher than 2% to make it worth it, simple math.