Pay Taxes by Debit Card and Earn 5X Points
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Hilary Stockton
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Have a travel question we haven't covered yet? Want to share your secrets for traveling well for less?
It's time to start thinking about taxes, if you haven't paid them already. And as little fun as paying taxes is, getting 5X points for paying them can mitigate some of the sting. Here's one option, which makes use of the Chase Freedom 5X bonus, MyVanilla Debit Card and Vanilla Reload cards.
 
1. Activate Chase Freedom 5X for January-March 2013

Don't forget to activate your Freedom 5X bonus for January-March 2013 before making your 5X purchases.
Note that up to $1500 in spend per card January-March 2013 receives the 5X bonus, so if your partner and you each have the card, that's up to $3000 in spend that you can get 5X on.
 
 
2. Buy a MyVanilla Debit Card and load $500 at CVS

The MyVanilla debit cards are as shown below. I wouldn't recommend them for regular purchases, as there's a per transaction fee and even a monthly inactivity fee. Their best use is for a single large transaction that liquidates the entire card. A number of folks simply get a free cash advance or deposit funds into their bank account, for this reason. For purposes of paying taxes, the ideal is finding Vanilla reloads so you can load this card up with enough to pay your taxes.
 
Here's what the MyVanilla Debit Card looks like:
 
Debit Card Taxes - MyVanilla Debit Card
 
 
 
3. Buy Vanilla Reload Cards at $500 each, Load onto MyVanilla Debit Card

Note that CVS generally restricts you to 2 reload or prepaid cards per transaction, so make your purchases of $500 reload cards in increments of 2 cards each time.
 
 
 
4. Pay Taxes
 
Select which payment processor you want to use. The IRS Web site has a handy chart of the different processors and the fees they charge. As you can see, it's best if you use a debit card to pay, since it just incurs a flat fee, whereas credit cards take a percentage of the transaction.
 
Use Debit Card to Pay Taxes - Choose Payment Processor
 
 
If you and your partner each have the Freedom and max out your 5X bonus at CVS buying the MyVanilla Debit card and reloads, you'll earn 15,000 points for your $3000 in spend.
 
 
Cost
 
Your cost to do this will be:
  • $3.95 for MyVanilla Debit Card
  • $3.95 per Vanilla Reload card
  • $2.99-$3.95 flat fee to pay taxes by debit card
  • 2 x 50 cents, because debit card flat fee and actual tax payment billed as 2 different transactions and MyVanilla charges 50 cents per transaction
 
Let's say your tax bill is $3000. That would equate to $27.69-$28.65 in fees, so 0.92%-0.96%--not bad.
 
How will you be paying taxes this year to maximize miles and points, at a reasonable fee?
 
 
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Comments
Picture?type=large John M. commented 22 Jan 2013
Wow, that's an awesome idea. I'm just not sure which card to put it on. I don't have any cards with a spend requirement left. I suppose it'll be on my SPG Amex. With Amex getting ready to axe the 20% point refund on travel booked with points, I'm angry with them.
Avatar_60_img_0373 NATE S. commented 05 Feb 2013
IS 'MyVanilla Debit Card' a real debit card with a PIN number? I noticed that a lot of prepaid cards although they have 'debit' printed on the card, can't be used as debit but more like a credit card.
Avatar_60_hilary Hilary Stockton commented 06 Feb 2013
Nate, the MyVanilla Debit Card is a real debit card--you get the PIN after registering it (you have to provide your SSN--you can register a maximum of 3 cards to one SSN). Keep in mind though that you'll be charged $1.95, plus whatever the ATM charges--so you'll only want to do this with a large withdrawal, and preferably at an ATM that charges no or low fees.
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