Posted by William Charles on April 4, 2018
Manufactured Spending

Published on April 4th, 2018 | by William Charles


Earn 5x Chase UR By Paying Your Federal Income Taxes (Freedom Q2/PayPal + PayUSATax)

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 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

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What about the PayPal fee? Is that waived during the Freedom promotion period? Otherwise it’s 2.9% plus the 1.97% which sort of wipes out the 5x

Generally, Paypal fees are borne by the recipient.

Yes generally. Would be good if we had confirmation.

No other fee involved.

What happens if you over overpay? Check in the mail??

Yes, when you file your taxes, any over-payment should contribute to a larger refund.

I’ve had trouble with the whole process in my personal experience… each type of MS has its own costs and hassles and if you’re willing to stay on top of it this can be a lucrative opportunity. Just don’t assume it’s guaranteed to go smoothly.

YMMV on this one. May seem fishy since your paying using the 1040 payment option. I can however tell you it does work if you over pay your estimated taxes for last year q4 which is due on 1/15/18. Any estimated taxes paid after 1/15/18 will reflect payment against 2018 tax year. You can however max out 1500$ in estimated tax payment for 2018 to get the 3.xx%, but that would be a free loan to the irs. A slick deal here would be for those who are new freedom card members who has the 0% apr on purchases to just charge up 1500$ and pay the monthly min.

What problem did you have with it?

Just file an extension with the method you want to overpay then get a refund when you file easier


Very useful post to me, thank you. I hadn’t thought of using PayPal like this but should’ve as I’ve used CCs to prepay taxes before.

Payusatax allows two payments per quarter. If you want to pay taxes with more than two Freedom cards, you need to spread them out over multiple tax quarters. The relevant tax quarters are Feb 1 – Apr 15, Apr 16 – Jun 15 and Jun 16 – Sep 15.

The maximum tax you should pay with a card is $1471, so that the total of tax and fee does not exceed $1500.

Just wanted to chime in that I think $1471.02 would be the sweet spot as far as the amount of taxes you want to pay. That would generate $28.98 in fees, but your total payment would be $1500.00.

You beat me to it. I agree 100%

Most people chose to round, so the .02 isn’t reportable. So you’re actually better offer paying $1,471.00

Just putting this out there –
If you have the Discover debit card, you can use it through pay1040 for just a $2.59 fee. So if you pay the full 3k (30.00 max limit ), you make out $27.41.
Every little bit helps 🙂

Thanks for the info.

Do you have to give your SS# to these organizations to use them for income tax?

Abelian Grape

Of course.

Does paypal also get your SSN to process payment on your behalf to payusatax?


Yup, did this for my SO on 4/1. She got a windfall of money after her dad passed early 2017. Ended up owing. We used my Freedom to pay it and she Zelle’d the money my way. Easy way to max the quarter. Now I’ll focus on making Disc It and still have my Amex BCP when that’s done.

Aw man, I paid mine two months ago… if only I knew Paypal was gonna be a category…

Paying taxes in a way to satisfy a new card that requires a high initial spend. Signed up a couple weeks ago for the SPG American Express business card with 35K point bonus that requires a $7K spend in 3 months. I normally cannot make that kind of spend, but I got whammed with a $5K tax bill this year. Going to pay my taxes next week with the SPG Amex.

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.

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.

ProTip: Sort by ‘Payment Repayment Period’ [ 6 Months is the lowest] And then add another filter showing the ‘Safest’ Banks they are associated with, for a lower risk of Default.

Break even point is $6,000 payment in tax

Anything above that and you are losing money on fees

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?

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.

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