Hilton HHonors - Pay taxes with AMEX card?

At the AMEX HHonors site, I noticed a pitch to pay federal and state income taxes using your Hilton AMEX card. I noted also that there is a fee of 2.49% for doing so.

If one had to pay a federal tax of say $1000, the fee would be $24.90.
One would receive 3000 HH points at 3 points/$ spent. The price paid per point therefore would be $0.0083 or .83 cent.

There has been considerable discussion on this board on the value of HH points. Some, depending on their usage, valued a point at 1 cent or greater. Would this not be a good deal for anyone who values a point > .83 cents?

IMO, it all depends on whether one has a real and immediate strategy for using those points and maximizing their value, IMO. Other credit cards may also be used, and the usual "convenience fee" charged by the provider / middleman ranges from 2.49 to 2.95%.

You can see who the authorized providers are at this IRS link (http://www.irs.gov/efile/article/0,,id=101316,00.html).

At the AMEX HHonors site, I noticed a pitch to pay federal and state income taxes using your Hilton AMEX card. I noted also that there is a fee of 2.49% for doing so.

If one had to pay a federal tax of say $1000, the fee would be $24.90.
One would receive 3000 HH points at 3 points/$ spent. The price paid per point therefore would be $0.0083 or .83 cent.

There has been considerable discussion on this board on the value of HH points. Some, depending on their usage, valued a point at 1 cent or greater. Would this not be a good deal for anyone who values a point > .83 cents?

I am pretty certain you will get 5 points/$ if you pay your taxes using your HH card it least that was what I saw in some literature ( with card statement??) recently.

mike

I am pretty certain you will get 5 points/$ if you pay your taxes using your HH card it least that was what I saw in some literature ( with card statement??) recently.

mike

I just checked my statements and did not see anyhting ... but I will get a nice refund anyway :D

I am pretty certain you will get 5 points/$ if you pay your taxes using your HH card it least that was what I saw in some literature ( with card statement??) recently.

mike

5 points would make it even better. For someone trying to get Gold by charging $20000, this could be a big help depending on how much they owed.

Will the IRS decide that these points are taxable at sime time, especially if you are deriving benefit from paying your taxes?

Will the IRS decide that these points are taxable at sime time, especially if you are deriving benefit from paying your taxes?

No. There is no tax on buying HHonors points from Amex. If anything, maybe a state could theoretically stake a claim to sales tax, but I think it's too big of a stretch and not enough volume for them to worry about it. In any case, the IRS doesn't care how much you pay for points/miles - they just want their money.

Fortunately, the IRS has decided, iirc, airline miles and hotel points are not taxable as you earn them (but if you won a bunch, well, bets are off.) Unfortunately, the IRS has also decided if you donate miles to a 501(c)(3) non-profit agency, the airline gets the tax deduction, not you. The IRS giveth, the IRS taketh away, and it taketh away, and it... and I suspect it would be the same for hotel points.

Fortunately, the IRS has decided, iirc, airline miles and hotel points are not taxable as you earn them (but if you won a bunch, well, bets are off.) Unfortunately, the IRS has also decided if you donate miles to a 501(c)(3) non-profit agency, the airline gets the tax deduction, not you. The IRS giveth, the IRS taketh away, and it taketh away, and it... and I suspect it would be the same for hotel points.

True - and this case is even different from that, as you're effectively purchasing the miles/points from Amex. You aren't "earning" or "winning" anything.

If you win a banana in a free contest drawing, it's taxable as income to you at its fair market value. If you buy a banana at the grocery store, it's taxable as sales tax to the state and, eventually, as part of the grocery store's income tax on their profits.

Same goes here. I don't know about sales tax, but Amex is making a lot of money by selling you these points, and they'll be taxed by the IRS on their corporate income.

I'm not sure what the current landscape is for donating travel to a nonprofit. An easy method from long ago would be to get paper awards issued to you and then donate those to a charity's fundraising auction. You could assign a reasonable FMV to a hotel night or a free flight and the charity would hand you a donor receipt for that amount. But without the paper award I'm not sure how this works...