How I Paid My Taxes This Year

2024 was an excellent year for investments, with the Dow Jones Index climbing 15%, the S&P 500 25%, and Nasdaq almost 30%.

I cashed in on some of my assets, and my business generated some income on which I didn’t pay taxes at the time. Unfortunately, Uncle Sam came calling. After all was said and done, I owed the IRS a hefty $34,335 in taxes this April. The good news is that income generated those taxes, so in all, 2024 was a good year. The amount stung nonetheless. Fortunately, I found a way to take some of the sting out of it.

I applied for the Capital One Venture X Business Card and used it to pay my taxes in full. The IRS allows payment with a credit card, but they do charge a 1.75% fee, which is significant. For my tax bill, the credit card fee totals just over $600. Given this, why does it make sense to pay with a credit card?, and why did I choose this card? There are several reasons for this:

• This card awards 2x unlimited points on all spend. This means that, for paying my taxes, I was awarded 68,670 points. At a minimum, I can use those points for a statement credit of 1%, or $687. This not only offsets the credit card fee, it nets me a benefit of almost $100! At a maximum, those points are worth much more, so I will find a better way to use them. As an example, The Points Guy currently values Capital One Reward Points at 1.85 cents. Applying this value to the points I earned by paying my taxes means they’re worth $1,270, which more than covers the sum of the IRS credit card fee and the annual fee of $395!

• There is no preset spend limit on this card, which enabled me to pay my entire tax bill with it.

• The sign-up bonus for this card is 150,000 points. The condition to earn those points is to spend $30,000 within three months. My tax bill alone met the condition! Now I’m up to 220,000 points, which more than covers first class round trip airfare anywhere I want to fly.

• 2x unlimited points on all spend make this an important card in my portfolio. Not only will I use it for my business expenses, but I can also use it for all expenses for which I don’t receive a greater point value. Some examples I can think of are medical bills, home improvement/repairs, utilities, veterinary, beer and wine…oh, and taxes!

• The card awards 10,000 points annually, and provides a $300 annual travel credit. These two benefits alone cover the annual cost of the card.

• This card provides Priority Pass and Capital One lounge access. I live in the Washington, D.C. suburbs, and Capital One has airport lounges in both local airports, Dulles (IAD) and Reagan (DCA). This is extremely convenient for me.

Summary:

My elevated tax bill provided an excellent opportunity to obtain this card and extract value from it immediately. I saw the Capital One Venture X Business card as the most valuable for me in this situation.

What are your thoughts? Would you have used a different card? Have you used a credit card to pay your taxes? What other unusual expenses have you been able to pay with a credit card? Share your comments!