PepeBorja

Paying taxes is part of life so why not get LPs from it? I have the Citi Exec card with the 40K spend for 10K bonus LPs… For me, spending $40K gets me a net of 50K LPs to help with the slow travel post covid.

Spending 40K is tough but I recently made my quarterly tax payment with the card for $5K giving me 5K LPs in exchange for a 2% fee. Beats mileage or mattress runs in my book and helps me get closer to the 10K bonus. For my level, the $100 fee for 5K LPs is almost the same as a $425 fare.

I may need the extra LPs to make my target. I am using my card to help make up for the loss of flights and meet my tax obligations.

seawolf

In theory you can pay more than you owe in estimated taxes (say $200k and pay $3740 in fees for EXP) and claim a refund when filing.

IADCAflyer

Not only that, but you can significantly over pay (up to $5000), and get your refund in the form of a paper Series I bond which is yielding 10%. A double win!

davecraze

Just a tip - when you pay the monthly credit card bull, you will be limited to paying only the card balance plus 7.5% by the AA Citicard (and constrained by the credit limit, if applicable). You cannot prepay above the card limit with the AA Citicard, either.

seawolf

You should be able to get around that by sending payment from your bank (push) vs. having Citi initiate a debit (pull).

PepeBorja

I looked at my statement and the fee was $92 not $100. Not bad for 5000 LPs.

The new program has definitely changed how I look at keeping my status and found this tax paying nugget to be a valuable tool to fill a gap which I previously did doing mileage runs.

It is also changing how I use my award miles and hotel points. I just booked a Europe trip and used RocketMiles for the hotel rather than my hotel points. I found a hotel stay at RM with 42K base miles and figured that should be enough to renew my EXP when I would have normally used my Marriott points. No big deal as I can use the points elsewhere.

The rules have changed and I find myself doing things differently… I bought a Motley Fool Subscription for $99 and 6500 LPs and bought a few things in AAshopping’s partners for my Jeep to get another 3000 points and even got a good deal on the purchases.

IADCAflyer

Pay1040.com has fees of 1.87% for tax payments. Thats not too bad. if you're in a pinch, its certainly less painful than trying to manufacture spend by buying and liquidating gift cards.

inlanikai

Sounds like the old scheme with buying the dollar coins (Suzie-B's?) for no fee using an AAdvantage linked credit card direct from the US Treasury and redepositing the coins in your checking account to pay the resulting credit card bill. Leave it to FTers to find a way,

seawolf

Sacagawea coins. US Mint was losing both shipping and credit card fee on each transaction as it was not being passed to buyer.

IRS is not losing out in credit card tax payments as 3rd party processors are charging credit card transaction fee. Some card issuers (2% cashback cards) are probably losing out.

Herb687

Opportunity cost.

Heck, forget opportunity cost. Even cost cost is reason enough not to get LPs from paying taxes!

There's no way I would pay > 1.5% for any fake currency like AA LPs.


No it doesn't sound like that scheme at all. The bolded part is why.

seawolf

It is like buying miles for about $0.0185 per mile. It could work out depending on how the miles are redeemed.

WeekendTraveler

Some states don’t charge a fee when you pay state income taxes by credit card.

Herb687

Problem is that unless you are going to redeem immediately and have a ticket on hold, there's no way to know if that will work out or not.

I would absolutely not pay anywhere close to 1.85 cents per mile for AA miles. I occasionally get 2.5+ cent redemptions but given that I have a healthy mileage balance already, any miles I buy today will not be redeemed for years into the future. I think it's safe to assume that the miles one buys today for $0.0185 will be worth far, far less when one goes to redeem in a few years.

If buying AA miles to stockpile for redemption in a far, far off future, I'd only consider a price well below a penny.

hdp323

The only time that'll make sense is if you're short of a few thousand miles for the next tier for your elite status. Otherwise, paying 1.8 cent per mile is insane. I value my AA miles less than 1 cent given that there are also opportunity costs of not being able to acquire additional miles by booking flights using cash.

mvoight

Interesting, I had no idea the IRS gave refunds with bonds