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As a self-employed freelancer, one thing that tends to creep up on me is paying estimated quarterly taxes. Just like how the holidays are here before you know it, so is having to pay Uncle Sam.
When I had a day job, I only needed to worry about paying taxes during the regular tax season. But since I’ve been working for myself, I need to pay taxes every three months. And it’s typically a fair chunk of change — we’re talking several thousand dollars.
One year, I used tax time as an opportunity to swoop in on a sweet introductory bonus deal from the Ink Business Preferred® Credit Card. At the time, if you spent $5,000 the first three months of getting your card, you’d earn 120,000 points (this offer is no longer available — the current offer on the card is for 100,000 points after spending $15,000 on purchases in the first 3 months from account opening).
Here’s how I raked in 120,000 bonus points on my small-business credit card by paying off my quarterly self-employed estimated taxes.
We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.
I applied for the card at tax time
Because I wanted to start putting all my business-related expenses on my Ink Business Preferred® Credit Card at the beginning of the year, I waited until January to apply. In fact, my very first transaction on the new card was to pay my quarterly estimated taxes, which were due on January 15. It was about $3,800, and I paid the full amount online.
Because I had three months to complete the minimum spending requirement, and estimated taxes are due every three months, there’s a good chance I would be able to make one of my estimated tax payments with my card. But I didn’t want to take any chances, so decided to open a card right before the January 15 payment was due.
I paid the full tax bill with my card
If you use a credit card to pay your estimated taxes, there is a minimum processing fee of 1.99%. Yes, I was fully aware that nearly 2% isn’t chump change, and 2% of $3,800 is about $76.
When you have the Ink Business Preferred® Credit Card, your Chase Ultimate Rewards points are worth 1.25 cents each when you redeem them for travel through the Chase Travel Portal, and 1 cent each f you redeem for cash. By using my tax payment to earn the welcome bonus, I was looking at points worth $1,200 in cash or $1,500 in travel.
Because I had that money saved up for taxes (I save a percentage of my income just to pay Uncle Sam), I paid my balance in full the following month. Using a credit card was purely for the points.
I referred colleagues for extra points
The Ink Business Preferred® Credit Card also offers a referral program. At the time, for every person who used my referral link to sign up and get approved for the card, I earned 10,000 bonus points (these offers go up and down periodically). This only happened once or twice, but it was pretty easy and my friends were already curious and knew a fair amount about that particular card.
Right now, the Ink Business Preferred® Credit Card offers 100,000 points after spending $15,000 on purchases in the first 3 months from account opening. It’s a lot of money, no doubt, but if you’ve got a hefty tax bill you could easily meet the spending requirement.
If you owe less on your taxes, other small-business credit cards might suit you better. For example, the no-annual-fee Ink Business Cash® Credit Card and Ink Business Unlimited® Credit Card offer $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.
I made the most of the bonus categories
While some cards offer bonus categories on groceries and gas, the Ink Business Preferred® Credit Card earns 3 points per dollar on travel, shipping, phone, cable, internet, and search engine or social media advertising purchases (up to $150,000 in combined purchases per year, then 1x) and 1 point per dollar on everything else.
As these are things I spend money on anyway for my business, I set up autopay for my phone and internet bills and linked them to my Ink Business Preferred® Credit Card. That way, I rake in extra points on recurring monthly purchases.
You’ll need to do some basic math to see what the processing costs are to use a credit card to pay your taxes. But if you’re self-employed and pay estimated taxes each quarter — and depending on how much you owe — it could be worth it to pay with a credit card and take advantage of an attractive welcome bonus offer.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
Please note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed, or may no longer be available.