Personal Finance
How I Turned My Tax Bill Lemons Into Lemonade (and Points)
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Last week, I laid out the circumstances that made for a rough and anxiety-inducing tax season this year. In that, I highlighted a few options we were considering for taking care of our large and unexpected tax bill. As it turns out, we ended up selecting a few of those options and employing them all. With that, I intend to talk about my experience with each element of my actions in the coming weeks — but, today, I wanted to discuss the most exciting part of my plans: what I’ll call turning my tax bill lemons into lemonade.
How I Used My Tax Bill to Earn a Credit Card Bonus
You Can Pay Taxes with a Credit Card?
Before we get into the details of my credit card bonus experience, you may be surprised to learn that you can even pay taxes with a credit card in the first place! Well, it turns out that you can — although it may not be the best idea in most situations.
While there are a few sites that allow for tax payments via credit card, the one I went with is Pay1040.com. At the time that I’m writing this (in April 2025), this site charges a fee of 1.75% for consumer cards and 2.89% for “commercial” credit cards — which, for some reason, also seems to include all American Express cards. Since this is a bit confusing, they do have a fee calculator where you can enter your actual card number and confirm what the fee will be before you go through the hassle of entering all of your information.
Obviously, this fee makes it so that most rewards you’d earn from a given credit card will be offset or usurped by the expense. However, since credit card welcome bonuses can be quite lucrative, it may still be worth it in those situations. That’s exactly why I decided to explore this possibility and find the right card for the job.
Choosing a Card
Considering that my tax bill amounted to more than I’d normally spend in a three to six-month period, I figured that this was a good opportunity to try and claim a big welcome bonus I might not hit under regular circumstances. After all, the higher the initial spending requirement, the more lucrative the rewards (at least that’s how it typically works).
As luck would have it, Chase had just brought back its much-celebrated Chase Sapphire Preferred 100,000 point bonus offer days before I discovered my tax predicament. With a minimum spending requirement of $5,000, this would have been a perfect pick… except for a couple of factors. First, my wife already has this card as she was able to claim the 100k bonus the last time it came around. Although this doesn’t negate me from getting my own this time, I didn’t have much interest in that. Plus, I’d just opened another card with Chase a couple of weeks earlier and I didn’t want to push my luck with the bank.
That brought me to the Capital One Venture Rewards card. Although it wasn’t offering 100,000 points, the current bonus offer is still pretty damn good: Earn 75,000 bonus miles after spending $4,000 in three months — plus earn a $250 Capital One Travel credit to be used in your first year. Doing the math, between the $70 Pay1040 convenience fee and the Venture card’s $95 annual fee, I’d still manage to net $585 in rewards plus the $250 travel credit through this deal.
Even though this seemed like a great plan, I did still have some reservations (beyond the fact that I regularly say I don’t need any more credit cards!). First, what would happen if I didn’t get my card number instantly? With my tax bill due right away, this would have been a deal breaker. Second, what if Capital One didn’t count tax payments toward eligible spending? I’d read that they should — and they even have an article on their site discussing credit card tax payments — but I wasn’t going to dive too deep into the terms to know for sure. Thirdly, if either of those things were to happen, I likely wouldn’t be able to hit the bonus still, so I’d be out between $95 and $165 instead of making that $585 net profit.
To that last point, one factor that helped convience me that it was still worth a shot despite the risk was that $250 travel credit. Looking at the wording, it seemed as though the Capital One Travel credit offer was separate from the minimum spending requirement. In other words, we should receive it just for signing up. That would mean that, at worst, we’d pay $165 for a $250 credit — and, at best, that $250 could be $835. So, with that in mind, I went for it.
Instant Card Number Access
The first piece of good news is that I was approved for the card. Also relieving was that my credit limit was above the amount needed to hit the minimum spend in a single go. However, I was a bit worried when I didn’t initially see where to view my card numbers.
After adding my new Venture card to my existing Capital One account, I decided to fire up the bank’s app instead. Sure enough, when I did, the Instant Card option was right there on top of the Venture tile that had been created. Phew.
Entering that number into Pay1040 was simple and I was relieved when the payment went through. But, while I had taken care of the tax part of the equation, I still needed to wait for confirmation that my bonus plan would succeed.
Waiting for My Bonus to Post
As soon as I completed my tax payment, the amount was deducted from my credit limit and, shortly thereafter, the payment and fee showed as two separate pending transactions. A couple of days later, they posted as a balance — which happened to coincide with a bonus tracker being added to my Capital One app. Interestingly, although the balance did show, this tracker still said I’d spend $0. This would have worried me more, except that it said it’s only updated once per day, so I figured I’d give it some time.
Thankfully, when I checked my tracker that evening, it showed that my minimum spending requirement had been met. Not too long after that, my 83,140 miles (the 75,000 bonus plus 8,000 miles for the tax payment and 140 miles for the payment fee) hit my account.
Of course, there was still one other part of the bonus to confirm: my Capital One Travel credit. As mentioned, I was pretty sure that I’d get this either way, but I was still excited to see it post. I did see somewhere that it could take up to 72 hours to show on my Capital One Travel account — and that’s basically how long it took. But, after that wait, I was able to see my $250 credit. Victory!
Getting hit with a large and somewhat unexpected tax bill was certainly nerve-racking. Thus, I wouldn’t want to go through the experience again. That said, I am happy with how this particular part of my plan came together as I now have points that I can use to help pay down my balance or utilize for travel (in addition to the $250 travel credit). To me, this makes the hassle of applying for the card and paying via Pay1040 worth it.
Incidentally, going forward, it may even make sense to keep putting tax payments on my Venture card. That’s because the card earns 2x miles while the current Pay1040 fee is 1.75% — meaning that there’s a slight profit for each payment. Since I’ll need to be making quarterly estimated tax payments again anyway, perhaps this is a viable solution… but I’m not sure I’ll follow through on it.
So, with that step out of the way, what else did I do to settle my tax bill? Stay tuned.
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