Earning credit card rewards while doing taxes: A step-by-step guide.

Filing your taxes during tax season can be stressful, but paying with a credit card can earn you rewards or cash back.

Before deciding to pay taxes with a credit card, it's important to assess whether it's the best option for your specific circumstances. If you do decide to pay with a credit card, it's crucial to choose the right one that offers the highest rewards. Instead of using a rewards credit card that only offers 1 point or 1% cash back, consider exploring other options to maximize your potential credit card rewards.

CNBC Select provides tips on maximizing credit card rewards when paying taxes, including strategies for using tax preparation software to earn rewards and save money.

How to pay your taxes with a credit card

Three IRS-approved third-party payment processors accept credit card payments from major networks, including Visa, Mastercard, Discover® and American Express. Each processor charges different fees.

These are the three payment processors and their fees:

PayUSAtax.com: 1.82% (minimum $2.69)
Pay1040.com: 1.87% (minimum $2.50)
ACI Payments, Inc.: 1.98% (minimum $2.50)

If you pay your business taxes with a credit card, the card processing fees are tax deductible for your business, but not for your personal tax return.

Open a new travel credit card with a welcome bonus

Applying for a new credit card with a planned large expense, such as a big tax payment, can be advantageous since most welcome offers necessitate spending several thousand dollars to obtain the bonus. Several travel rewards credit cards offer substantial sign-up bonuses that can accumulate enough points or miles to redeem for an almost-free vacation.

The Capital One Venture Rewards Credit Card, Chase Sapphire Preferred® Card, and The Platinum Card® from American Express offer some of the largest welcome bonuses for top travel rewards cards. If you redeem your rewards correctly, you could potentially earn over $1,000 in value from these bonuses.

Two credit cards to consider for a new business credit card are the Chase Ink Business Preferred® Credit Card and The American Express® Business Gold Card.

Use a credit card that offers a high cash-back rate

If you're not interested in travel rewards, consider opening a new credit card that gives cash back on your purchases and using that card to pay your taxes. If you open a cash-back card that offers a welcome bonus and at least 2% cash back on your purchases, you'll essentially keep some money in your pocket after taking into account the processing fee charged by the payment companies.

A smart tax-paying strategy is to use a 0% APR credit card that offers promotional financing for up to 21 months, which many popular cash-back cards provide.

If you're looking for a cash-back credit card, the Wells Fargo Active Cash® Card, the Citi Double Cash Card, and the Bank of America Unlimited Cash Rewards Card are all great options. The Wells Fargo Active Cash® Card earns unlimited 2% cash rewards on purchases, the Citi Double Cash Card earns 1% back when you purchase and 1% back when you pay, and the Bank of America Unlimited Cash Rewards Card offers 2.62% back if you qualify for the highest tier of BofA's Preferred Rewards program, otherwise it's a 1.5% back card.

The American Express Blue Business Cash™ Card is a cash-back card option for business owners, earning 2% cash back on up to $50,000 per calendar year, then 1%.

Use a credit card with bonuses for meeting spending thresholds

If opening a new credit card isn't feasible, you can still pay your taxes using one of your existing credit cards and potentially earn rewards such as airline or hotel elite status, airline companion certificates, or free hotel night certificates by selecting the right card for the task.

Here are some examples:

You can earn American AAdvantage Loyalty Points that help you qualify for elite status with the Citi®/AAdvantage® Platinum Select® World Elite Mastercard® or the AAdvantage® Aviator® Red World Elite Mastercard. Elite status starts at 40,000 Loyalty Points for Gold status, and you earn 1 point per dollar spent on your credit card. Additionally, the Aviator card offers a companion certificate for one guest at $99 plus taxes and fees each anniversary year when you spend $20,000.

Earn up to 1,000 Premier qualifying points (PQP) with the United℠ Explorer Card for every $500 in net card spending in a calendar year. These points can be used to qualify for United Premier status up to and including the Premier 1K level.

Earning a free night certificate and complimentary Hilton Gold elite status are benefits of the Hilton Honors American Express Surpass® Card. You can be promoted to Diamond elite status by spending $40,000 in a year.

The World of Hyatt Credit Card offers a free night certificate for Category 1 to 4 hotels annually, and you can earn an additional free night by spending $15,000. Additionally, the card provides complimentary Discoverist status, and for every $5,000 spent, you earn two elite night credits that can be used to elevate your status to Explorist or Globalist.

Check online shopping portals and look for credit card merchant offers

Before purchasing tax software to help you find deductions, make sure to first click through an online shopping portal.

You can earn extra points, miles, or cash back through a shopping portal in addition to the rewards earned from using the card.

Some examples of shopping portal offers currently available include:

1,000 Southwest Rapid Reward points for TurboTax through the Southwest Rapid Rewards shopping portal
H&R Block offers 6 American AAdvantage miles per dollar through the American Airlines AAdvantage shopping portal.
10% cash back for TaxAct through TopCashBack
TaxSlayer offers up to 25% cash back or 25 American Express Membership Rewards points through Rakuten.

To determine which tax prep software program offers the highest return, you can use a shopping portal aggregator like Cashback Monitor to compare rewards earnings. Keep in mind that offers may change frequently and without notice, so if you see a high offer, it's best to act quickly. Additionally, you may see increased offers as we approach the tax filing deadline on April 15.

You can combine the rewards from the shopping portal with discounts from card-linked offers, such as Chase Offers, Amex Offers, Citi Merchant Offers, and BankAmeriDeals. These limited-time offers provide savings at select merchants when you link your associated credit card to the offer. They can be found in your online account with the card issuer.

We have observed various tax prep software offers in the past, which may require enrollment and are not universally available for all credit card merchants.

Spend $500 or more with Amex and receive $100 for TurboTax Live Small Business Tax Preparation.
You can receive a 30% discount, up to a maximum of $60, when purchasing TaxAct with an Amex offer.
Get $10 cash back and up to 10% off when you buy TurboTax through Chase's link and spend $25 or more.
Chase Offer of $7 cash back on your TaxAct purchase
You can receive a 25% discount, up to a maximum of $60, when you purchase TaxAct using Citi Merchant Offer.
Get a $10 rebate from TurboTax when you spend $25 or more through Citi's link, plus additional savings.

Before making a purchase, ensure you have added your credit card offer and carefully review the fine print for any exclusions.

Bottom line

Maximizing rewards earnings during tax season is easy when paying with a credit card. Consider signing up for a new card or using one that offers bonuses for high spending thresholds. However, be mindful of charging only what you can pay back in full to avoid interest payments that could negate rewards earned.

If you plan to buy tax preparation software, you can still earn rewards and potentially save money, regardless of whether or not you owe any taxes.

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