Complete Guide to Paying Taxes Via Credit Card, 2017 Edition

[MULTIZ321]

Complete Guide to Paying Taxes Via Credit Card, 2017 Edition
By Greg, The Frequent Miler/ Boarding Area/ frequentmiler.boardingarea.com

"Preparing taxes is no fun. No fun at all. But paying taxes doesn’t have to be painful. In fact, paying federal taxes can be quite rewarding. The key is to earn credit card rewards that more than offset tax payment fees. Here’s what you need to know…"

Richard

 

[VegasBella]

Woah! I had no idea this was possible. Thank you so much. This is potentially life changing.

 

[Beaglemom3]

Thanks !

 

[mdurette]

I've been paying uncle sam for years this way. It is the only thing that makes the sting a bit less for me....knowing that I have some decent points coming my way.

I never thought of the gift card route - didn't realize that would be a debit and the flat fee. I suppose that would work for people with around $3,000 owed. 6 x $500 gift cards.

 

[Conan]

The article states, and the IRS agrees, that for "business tax types," the fee is a deductible business expense.
https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card

The IRS list of business taxes includes
"Form 1065 Series - US Partnership Return of Income Tax Form"
https://www.officialpayments.com/fed/pc_step_fed2.jsp?categoryId=2#

Of course, a Partnership Return Form 1065 is an information return that doesn't show any tax due. It generates the Forms K-1 that partners use to report and pay on their personal income tax Form 1040, via Schedule E, their share of the partnership's items of income and deduction.

Say you're an active partner in a profitable partnership, and you use your personal credit card to pay your income tax (via Form 1040 or Estimated Tax via Form 1040-ES). Shouldn't you be able to deduct most or all of the 1.87% credit card fee that you paid? Say you have $25,000 of non-business income and $75,000 of Schedule E business income on your personal return. Shouldn't at least 75% of the fee constitute business tax via Form 1065, deductible on your personal return?

If yours is a family business, all the partners could make their Form 1040-ES payments on their personal credit cards and for reporting purposes simply aggregate all their fees as a deductible item directly on Form 1065 (line 20 -- other deductions - - attach statement) so the fees pass through proportionally to their Forms K-1 and reduce the income tax they each need to report and pay on their personal returns.

What do our TUG tax accountants and attorneys say about this?