Paying estimated taxes instead of payroll withholding?

[Joel]

So I'm considering stopping my payroll withholding in order to make quarterly estimated tax payments instead. This would allow me to pay my quarterly estimated taxes with a credit card to increase my credit card churning capability.

As long as you pay the quarterly taxes like you are supposed to, I don't see any rule or law against it. Has anyone else done this?

This article is what peaked my interest:
http://frequentmiler.boardingarea.com/2016/03/17/top-5-reasons-to-pay-federal-taxes-with-a-credit-card-or-gift-card/

[SeattleCPA]

You can do that. The two things to remember:

1. Withholding is always timely... in fact with withholding you could if you wanted pay the whole year's taxes on New Year's Eve and that payment will be treated as timely. That doesn't work with quarterlies...
2. The mother of all tax battles is planning to make quarterly payments... but then getting into a tight cash flow situation and skipping a quarter or two... and then finding yourself at tax time in deep doo-doo land because your annual tax liability is pretty large.

P.S.Be sure the convenience fee of the credit card doesn't financially sabotage this idea...

[jwright]

I'm not convinced the extra fee is worth it, but I don't typically do cashback but award points.

My state does not charge any convenience fee however which is a huge benefit!

[protostache]

I actually set up the opposite this year. My S-corp's net payroll gets split between federal and state extra withholding, so my net paycheck is actually 0.

I've paid quarterly payments the last two years and every time I get closer and closer to the deadline. 16Q4 actually messed up and was late a few days! So from now on I'm done with quarterlies as much as possible.

[TomTX]

I'm not convinced the extra fee is worth it, but I don't typically do cashback but award points.

My state does not charge any convenience fee however which is a huge benefit!

Any benefit from regular award points would be marginal at best.

I suspect OP is taking about meeting minimum spend for signup bonuses. Example: Get a new Chase Freedom. Spend $500 in the first 90 days of card ownership and get $150 worth* of points.

Presume 1.9% convenience fee, and you're paying $9.50 to get $150. If the card is used as a 1% back card, you're paying $9.50 to get $155. If you add an authorized user, it's now $9.50 to get $180.

Alternately, spend on whatever the rotating bonus category is, and you are getting $200 for $500 in spend.

The churner will then cash in the signup bonus and either "sock drawer" or cancel the card.  Serious churners will be running lots of cards.

If you want to try this, here's my referral link:

http://emailoffers.chase.com/T/v200000159d236c463bd28776e96189988/b3779b730f3445f00000021ef3a0bcc6/b3779b73-0f34-45f0-a02e-6426ae2bdd6a

Chase is a good place to start first - they will only give you a new card if you have LESS THAN 5 new cards (from any bank)  in the past 2 years. While some might tell you to start with a premium card, the commitment is higher**. I think this is a good starter card.

*If cashed directly. If you want to use it on travel, you can get higher value - especially if you route the points through a premium Chase card...

**Example, the Chase Sapphire Preferred. $550 for a $4,000 spend and adding an AU. Annual fee waived the first year, $85 after that.

[jwright]

I'm not convinced the extra fee is worth it, but I don't typically do cashback but award points.

My state does not charge any convenience fee however which is a huge benefit!

Any benefit from regular award points would be marginal at best.

I suspect OP is taking about meeting minimum spend for signup bonuses. Example: Get a new Chase Freedom. Spend $500 in the first 90 days of card ownership and get $150 worth* of points.

Presume 1.9% convenience fee, and you're paying $9.50 to get $150. If the card is used as a 1% back card, you're paying $9.50 to get $155. If you add an authorized user, it's now $9.50 to get $180.

Alternately, spend on whatever the rotating bonus category is, and you are getting $200 for $500 in spend.

The churner will then cash in the signup bonus and either "sock drawer" or cancel the card.  Serious churners will be running lots of cards.

If you want to try this, here's my referral link:

http://emailoffers.chase.com/T/v200000159d236c463bd28776e96189988/b3779b730f3445f00000021ef3a0bcc6/b3779b73-0f34-45f0-a02e-6426ae2bdd6a

Chase is a good place to start first - they will only give you a new card if you have LESS THAN 5 new cards (from any bank)  in the past 2 years. While some might tell you to start with a premium card, the commitment is higher**. I think this is a good starter card.

*If cashed directly. If you want to use it on travel, you can get higher value - especially if you route the points through a premium Chase card...

**Example, the Chase Sapphire Preferred. $550 for a $4,000 spend and adding an AU. Annual fee waived the first year, $85 after that.

The huge benefit is for my state which charges ZERO convenience fee.  I, and other SC taxpayers, pay nothing.

[TomTX]

Frankly, no tax office should charge the convenience fee. Handling checks and cash probably costs them more than the credit card fees.