I'd imagine this has been asked and answered, but doing a search I come up empty:

I use my credit cards to pay my taxes online. Is there any way to overpay the taxes, thereby accruing extra miles/points, by having the overpayment refund go into one's bank account rather than simply being credited back to the credit card (thereby losing the extra miles/points)? I know of course that there is an extra fee for paying by credit card, but doing this might nevertheless be worth my while for reaching CC targets for hotel/airline status and perks.

Thanks for any help.

What should I do if I paid the wrong amount?

If you used our system and paid an amount greater than your balance due, generally the overpaid amount will be refunded to you through the IRS. You can contact the IRS directly at 1-800-829-1040 for personal taxes and 1-800-829-4933 for business taxes, for information regarding the overpayment. You can also call our automated customer service center, toll free at 1-888-658-5465 and select English or Spanish then options 7 and 2. If you used our system and paid an amount less than your total balance due, you can pay the difference by clicking www.pay1040.com.

pay1040.com/FAQ.aspx

Keep in mind that there is a 2-3% fee associated with using a credit card to pay taxes. If the miles/points are worth more than 2-3cpm, then go for it. That's up for you to decide, but in most cases, I'd say it's not.

Thanks very much for the feedback, mia and Antipode. What I might do in 2010, unless folks advise me differently, is use my CC to pay more in estimated taxes in 2010 than I will ultimately owe when it comes to pay my 2010 taxes in 2011. IIRC, I've inadvertently done this in a minor way in the past with state taxes and the refund went into my back account. I'll need to check this option out more on my own, but if anyone has any further advice about this I'd welcome it. And I am aware of the extra charge for CC use to pay taxes, not to mention the opportunity costs of leaving that extra money parked in state and/or federal coffers until its refunded.

For 2-3cpm, many here (including me) will advise you to actually do MR. That will earn you lifetime status through BIS miles and you get to go to many places. Just wait for the promotions to come.

It's only worth it at the end of the year if you need the CC spend to bump you over a particular EQM/PQM threshold of some sort. I considered it but thought better of it even though I'm less then $800 shy of earning another 10K EQM. Did the math earlier and realized it still wouldn't put me up to the next elite level without a MR anyway.

The convenience fee is now 2.35% (was 2.49% last year). If you were to use Bank of America's Virgin Atlantic American Express card which awards 1.5 miles per dollar on general spending the cost is $0.0157 per mile.

It's only worth it to pay taxes with a credit card if the convenience fee is deductible, like when paying business taxes. I paid my company local property taxes with a CC but wrote a check for my home as I don't get any value from itemized deductions due to income levels. But my business can treat the CC fee as an expense.

Thanks. Yeah, that's basically what I have in mind. I might use it to get to the BA Visa card $30K annual spend threshold which would get me a free companion ticket on an award trip. Other possibilities are making Hilton Diamond or Starwood Gold via the same technique, though the trade-off (in terms of the convenience fee) of making the status that way is more questionable.

It's a simple arithmetic problem. If you can buy miles at $0.0157 each and redeem them for greater value, why does the time of the year or a tax deduction matter?

mia, I think the time of year matters because this isn't mainly a question of accumulating more miles or points--or at least that's not what I was getting at. (Can't speak for others.) If, as the end of the year approaches, I don't have enough spending--such as on the BA card for the perk I mentioned--I might well reach that plateau through the tax payment. I'd be reluctant to do that earlier in the year, because at that point I wouldn't know whether I'd need that extra spending (on taxes) to reach the plateau.

I'm not as sure about susiesan's point, but I guess she means that if the convenience fee is deductible then using the CC for taxes in effect costs less.

It has been said by many that large refunds are criteria for an audit. Even if you are confidient you will pass an audit you may want to add in your cost of your time plus anyone else you may need for an audit.

I advise that you to read the T&Cs of that offer very, very carefully (before starting the $30k spend). It has some very onerous restrictions (i.e. all travel must be on BA metal, full taxes and outlandish levels of YQ are payable for both passengers, and travel must originate in the U.S.). You'll typically be spending more cash on these "free" tickets than any other airline charges for RT coach travel to London (all BA U.S. departures go to London). The best use of BA miles for NA passengers are typically on its partners (CX to Asia, QF to SWP, LA to S. America), but these routes are all excluded from the offer.... During periodic sales, RT BA business class to London can often be had for $1,000 + tax, so the potential "savings" from this offer may really only be around that amount. YMMV.

The usual problem is if it seems you are trying to evade taxes by shifting taxable income from one year to another. If the overpayment would not meaningfully lower the total amount of taxes you would pay, there should not be a problem. The relevant regs talk about the reasonableness of the overpayment, reasonable not being a very precise standard.

First of all, thanks to Centurion and richardd for discussion of the potential audit issue. I hadn't considered that at all--getting matters I hadn't considered raised is one of the reasons I posted my initial query to begin with.

Similarly, jbalmuth, thanks very much for the scrutiny of the offer. (What is YQ?) I just tested at the BA site what the surcharges would be for a revenue September 2010 C class trip from SFO to Athens, and came out with $371 per head--high, but not extraordinary. In view of your analysis, am I missing something here?