Credit Card and Taxes

[EconoMutt]

I've noticed that you have the option of putting your Federal tax payment
on your credit card for a fee. I have a hypothetical question.
Let's say you owe $12,000 on your house. Could you have very little taken out for taxes for a year, pay off your mortgage, then pay your tax with your credit card and walk away from your credit card debt?
I'm thinking this is a possible scenario due to the fact that the credit card debt is unsecured.

[sweeps]

Theoretically yes, but...
1. You can be penalized by the IRS for underwithholding during the year.
2. Most lenders will not let you pay your mortgage by credit card.
3. Your credit limit needs to be high enough to handle the mortgage, your taxes and any other purchases you made.
4. Your credit would of course take a big hit due to your CC going to collections.

[EconoMutt]

Theoretically yes, but...
1. You can be penalized by the IRS for underwithholding during the year.
2. Most lenders will not let you pay your mortgage by credit card.
3. Your credit limit needs to be high enough to handle the mortgage, your taxes and any other purchases you made.
4. Your credit would of course take a big hit due to your CC going to collections.

#2 You would actually pay your mortgage from the taxes that you are not paying throughout the year

[sweeps]

#2 You would actually pay your mortgage from the taxes that you are not paying throughout the year

Ok. See #1.

[EconoMutt]

Ok. See #1.

There's always a catch :-)

[safari]

If you want to walk away from the credit card debt, why make it so complicated? Just request the credit card to send you a convenience check and then write that check to your bank and pay off the mortgage (assuming you have a high credit line). Disclaimer: I don't recommend anyone do that.

[PaydayLoner]

Another problem with the plan...

If you only owe $12,000 on your house, are earning enough that your taxes are over $12,000 a year, and have credit good enough to have at least a $12,000 credit limit, the credit card company isn't going to let you "walk away," so there will be a pesky little judgment against you in court, followed either by your wages being garnished or some non-exempt property like a bank account being attached, with all the expenses of court costs, late fees, interest, etc. etc. added to the original $12,000.

Unsecured debt just means the lender has to win a lawsuit first, which would be easy to do, and then the lender can go after a whole bunch of stuff, with the court to help enforce.

Someone who started out in a pretty good financial position with good credit would wind up in the end paying quite a bit more than $12,000 and trashing their credit, and gain nothing.

[snshijuptr]

Plus considering that it's really unethical.

[coach2wealth]

And...I believe illegal since your planning to do it. I wonder if they could get you on conspiracy charges too for posting here?

Seriously, look into your heart. If this is the way you are thinking, then I'm sure you are surrounded by this corrosive environment. Get of of that environment! You can't win thinking like this.

[EconoMutt]

And...I believe illegal since your planning to do it. I wonder if they could get you on conspiracy charges too for posting here?

Seriously, look into your heart. If this is the way you are thinking, then I'm sure you are surrounded by this corrosive environment. Get of of that environment! You can't win thinking like this.

I'm not thinking about doing it. I've been watching a lot of programs lately about scam artists and how they work around the system. I was just wondering if this is something a scammer could try.
I've got good credit and would not want to trash my FICO score.