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The Ultimate Credit Card Rewards Hack

Living your dream vacation is easier than ever with credit card rewards. A litany of cards offer massive miles, hotel rooms or cash for spending a certain amount within a short period of time. And there’s the rub. How can the average person spend $3,000 and more to get bonuses of 50,000 points and up within a few months?

Enter manufactured spending. Reaching a level of required spending either requires owning a business with significant purchases, over spending your budget to get the rewards (why bother, it’s cheaper to buy the darn airline tickets) or manufactured spending. Manufactured spending takes time and requires jumping through hoops. There are also additional fees using many manufactured spending methods. And the time! Oh my god, the time to get it done. There has to be a better way.

Meeting spending requirements always required some fancy footwork. But for you, my friend, those days are over. Today I will show you how to reach nearly any spending goal you need for the vacation of your dreams at virtually no cost to you. In fact, you will probably get paid to engage my way of manufacture spending. The time requirements are nil and the whole process is easily handled from the easy chair in your living room.

If you want free vacations from now on, keep reading. The travel hack/credit card hack I am about to reveal is something I have not seen anywhere else. Even if you don’t care to travel, this strategy can drop $10,000 or more a year in your lap tax free.

Meet My Favorite Uncle, Sam

I know y’all come here expecting to read about taxes and stuff. Instead you find articles on early retirement, financial independence, tips on living the good life, and every so often a tax or investment tip. What’s up with that? Well, no more. Today we are going to talk about taxes (only a little bit) because the IRS wants to give lots of free money and vacations, all for the asking.

I will save the links until the end of this post so we can focus on the process.

It works like this: You can pay your taxes with a credit card on a few sites for a fee of 1.87% to 1.98% Since many credit cards have rewards worth around 1.5% to 2% the fee paid is negligible and even slightly profitable in some instances. The value of the points used for travel can make the transaction very profitable.

Bonus rewards of 50,000 or more points for spending a certain amount within a certain time—say $3,000 in 90 days—is no longer an issue. The IRS will help you accumulate nearly any amount of points needed to travel first class anywhere in world.

You and your significant other can apply for a few new cards a few times a year to supercharge your points portfolio of hotel rooms, airline rewards points, cash and other rewards.

Yes, I hear your groans. You don’t owe the IRS or you already filed your taxes. Never worry. This friendly accountant will now show you how a few tax hacks that will turn virtually any tax situation into a cash cow.

Pump Up the Volume

Owing money when you file your tax return limits the opportunities to capitalize on credit card rewards. You can only pay what you owe. Paying the IRS can take many forms, however. Estimated taxes are also payable via credit card. So are payroll taxes for small business owners.

Small business owners can pay their 940 and 941 deposits via credit card on the sites listed at the end of this post. Business owners with employees now have a reason to rejoice every payday.

For non-business owners there are plenty of additional opportunities. There is no rule requiring you to withhold your taxes from your paycheck. You are more than welcome to pay your federal withholding via an estimated tax payment. By changing your W-4 at work increasing your exemptions—thereby lowering your withholding—you will need to make an estimated tax payment to avoid a large year-end balance due. This will provide plenty of spend to meet the credit card bonus requirements.

The IRS says you can claim exempt on your federal withholding if you expect to owe no taxes on your next return. Well, you’re not going to have a balance due! Every month you will make your estimated payment online to keep the IRS happy and satisfy the spending requirements of your new credit card.

You can pay your state taxes the same way, but paying online by credit card is limited to a few states or the fees are higher. You can check the links at the end of this post to review if your state taxes can also be paid by credit card.

The Ultimate Hack

What I outlined above still limits your spending to your actual tax. If you have a low tax the above strategy still doesn’t solve the problem. No worries.

From now on I want you to file your taxes late. It’s okay. This is all legal.

I want you to give your tax professional all your tax documents like you normally do. When she finishes your return tell her to file an extension instead. Anytime during the year you need a massive amount of extra spend to satisfy multiple new credit card bonus requirements you simply pay the IRS an estimated payment for the 4th quarter of the previous year. Call your accountant and inform them of the additional estimated tax paid. File the return ASAP and have your refund direct deposited. You should have your refund in a week or two, well before the credit card payments are due. There is no limit to the size of this type of manufactured spending. Bit it is limited to once a year. Who ever thought you would be so excited looking forward to preparing your taxes?

Bringing it Together

This is a simple hack merging credit cards and taxes. Let’s bring it together so you can get started.

You can pay virtually any federal tax by credit card. Business owners can turn payroll tax payments into cash or vacations

Anyone can reduce their federal withholding at work and make estimated payments instead via credit card.

Finally, you get a once a year opportunity to gather massive rewards points by making a massive estimated tax payment and then filing your tax return so you have your refund before the credit card payment is due. If you use this strategy, know that if you do this after June 1st of the year the return is due the IRS will pay you interest from June 1st to the day the cut the check or direct deposit the funds.

Here are the three sites where you can pay your taxes via credit card online or by phone:

Pay1040: The fee is 1.87%. It is the lowest I could find and is less than some credit cards pay in cash back.

PayUSATax: This payment method is used by my tax software. The fee is 1.98% as of this writing.

Official Payments: Official Payments allows you to pay a lot of other taxes, tuition, fines, utility bills and more. The fee is higher, too. I only recommend this site for payments that can’t be made on Pay1040.

The above are not affiliate links, therefore I receive no compensation if you use their services.

Your friendly accountant does get hungry now and again so I humbly submit the credit card research link below. If you use the following link and apply for and are approved for a credit card at that time I will receive compensation. My hope is you will take pity on a wayward accountant and grant him the love of a commission check by getting all your credit cards using the link below from now on. Be sure to bookmark this page for later reference.

You can start your credit card research here or here (I like the second link as a starting point personally). The link takes you to a page with a few recommended rewards cards. There is also a tool for you to research the perfect credit card for your needs. You can pick up a card or two for yourself and your significant other can do the same. In no time at all you will be traveling the world tax-free, all thanks to the IRS.

Is Uncle Sam is starting to give you the warm and fuzzy? Me neither. I just can’t go that far with the love.


Monday 4th of April 2022

So can I make sure I understand this correctly?

Just before tax is due, say, April 10, make a 1040-ES payment for last year's final quarter (ending Dec 2021). Since the amount IRS has is more than the taxes you owe, IRS will refund you in a few weeks.

Is that right? I don't get why I need to file for an extension or what that changes.


Wednesday 4th of March 2020

Sorry to unearth an old post, but how does the new W-4 affect this?

Keith Taxguy

Wednesday 4th of March 2020

It doesn't.


Wednesday 31st of January 2018

HElllo Keith,

Form 1040-ES Estimated Tax” only allows payments for 2017....not for 2018 yet on all website you stated above, Than how do I pay monthly ? or they will open up 2018 after few months?

Keith Schroeder

Wednesday 31st of January 2018

They probably open 2018 fairly quickly here as 2017 ES payment due dates are all past. My guess is they don't roll over to the new tax year until they close the old. As soon as they accept 2018 payments you can catch up. Just hold the funds until the IRS can accept the money for 2018.

As an FYI, the IRS computers only opened two days ago for efiling for individuals. The initial deluge meant acknowledgements were slow. My office's response time from the IRS today is back to normal with acceptance received in a few minutes.


Wednesday 24th of January 2018

What is everyone's thoughts on buying groups? It seems like a great way to get legitimate spend. I know of a few that are our there but what has everyone's experience been? My understanding is that they are companies that need help buying products from stores or online to circumvent promotional restrictions. You basically but it, ship it to them and they pay you. How can you tell which companies are safe to work with?


Wednesday 24th of January 2018

Hi Keith, thanks for this great post. One question for you: Is filing the extension necessary if on April 15th I am ready to meet my credit card bonus spend? That is, say I owe $1,000 on my 2017 return. Can I on April 15th make a large tax payment for 2017 ($10K), file my return and receive an $9K refund? Or is filing the extension a necessary component of this deal?

Keith Schroeder

Wednesday 24th of January 2018

I don't see why not, JC, but that would probably cross in the digital mail and cause problems. I think it takes a day or so at least for payments to post at the IRS. You can always request the IRS to send the remainder, but that might take more time than you want.