Reward credit card providers allow you to double dip this tax season
By Ben Woolsey | Published: April 28, 2006
Paying taxes is right up there with root canal work on the scale of fun things to do, but a few of the nation's leading credit card issuers are trying to make it easier by offering double rewards (either through points or airline miles) for credit card cardholders who pay their 2005 federal income taxes with credit cards.
Several leading reward credit cards, namely the American Express Delta SkyMiles, Starwood Preferred Guest card and the Chase United Mileage Plus Signature card allow you to earn two reward points or miles for every dollar you pay the Internal Revenue Service on your 2005 tax return.
Certain restrictions and earnings caps apply, but this could be a great way to earn a few rewards just for rendering unto Caesar what is Caesar's.
It's important to realize that making a tax payment with your credit card is no free lunch being offered by the credit card companies, however. You must pay a convenience fee -- usually 2.49 percent of the tax amount paid -- by either Official Payments Corp. or Link2Gov, the two third-party processors who are authorized to collect tax payments on behalf of the federal government.
There are ways to save on the convenience fee, however. Specifically, if you use any MasterCard credit card to pay your taxes, MasterCard will rebate or reduce your convenience fee -- but there is a bit of a catch, of course. It's not an extremely large catch, though.
In a promotion with Link2Gov, if you use your MasterCard credit card or debit card to pay your tax bill online through H&R Block's online tax program, it will rebate the full 2.49-percent convenience fee on the first $350 of your tax payment, as long as you pay on or before Oct. 16, 2006.
In a promotion with Official Payments, if you pay your tax bill online through a special Official Payments portal, MasterCard will reduce your convenience fee from 2.49 percent to 1.99 percent on payments made through April 17, 2006.
- How credit cards take a bite out of gas prices – Bonus points, cash back or cents off per gallon of gasoline add up ...
- 4 fine-print traps to watch out for in credit card rewards programs – Making assumptions on how your rewards card program works can lead to disappointing discoveries ...
- Fund your football fandom with credit card rewards – Being a football fan can be pricey, but credit card rewards, cash back and other perks can help you save ...