Go Back  FlyerTalk Forums > Miles&Points > MilesBuzz
Reload this Page >

Paying USA income, property or other taxes with CC. [2010-2012]

Paying USA income, property or other taxes with CC. [2010-2012]

Old Jan 7, 2011, 4:17 pm
  #31  
 
Join Date: Jun 2010
Posts: 292
valuetaxpayment.com is legitimate, IRS web page updated

payusatax.com's "live operator" phone number is answering today, and I was able to speak to a representative at the phone number given by payusatax.com who confirmed that valuetaxpayment.com is legitimate. In addition, the IRS web page that I cited previously ( http://www.irs.gov/efile/article/0,,id=101316,00.html ) has just been updated to include valuetaxpayment.com .

So, if I understand correctly, the cheapest rates for paying US federal income taxes by credit cards are now:

MasterCard, Discover: payusatax.com 1.95%
Visa, AmEx: valuetaxpayment.com 2.29%

Last edited by skynerd; Jan 7, 2011 at 4:26 pm
skynerd is offline  
Old Jan 7, 2011, 4:17 pm
  #32  
 
Join Date: Sep 2009
Posts: 1,758
Originally Posted by mia
It appears the site operator has simply created a separate site, with a higher convenience fee, to process American Express and VISA credit cards.
Ding Ding Ding we have a winner!!!
QL_714 is offline  
Old Jan 8, 2011, 1:23 pm
  #33  
 
Join Date: Feb 2005
Location: LAX-TPE-LAX
Programs: No more status...just doing my best in burning my points/miles.
Posts: 2,005
Originally Posted by QL_714
Ding Ding Ding we have a winner!!!
2.29% is sort of a large haircut to take for most miles programs. Either way, I might get suckered.
party_boy is offline  
Old Jan 9, 2011, 12:14 am
  #34  
 
Join Date: Jun 2010
Posts: 292
Gift cards, state taxes

Originally Posted by party_boy
2.29% is sort of a large haircut to take for most miles programs. Either way, I might get suckered.
You may be able to add up to a 1.6% rebate by paying with an AmEx gift card via bigcrumbs (or 1.5%1.0% by pennyful), although you may bump into the limit that the maximum AmEx gift card value is $3k and you are limited to a maximum of two electronic payments for most US Federal Income tax forms (two payments per quarter for estimated taxes).

If your taxes are really small, you could buy a $500 giftcards.com gift card for a ~1.3% rebate via bigcrumbs or extrarebates and use that to buy a $500 AmEx GC, but, if you owe a lot, you are probably better off buying 1-2 $3k AmEx GC's with a credit card.Edit 8/28/2011: giftcards.com no longer offers these rebates.

For more details on giftcard rebates, see the first post at http://www.flyertalk.com/forum/miles...purchases.html . Also, I try to collect informaton on giftcards.com in post #299 in that thread.

By the way, my state income tax seems to have no such limit on the number of payments I can make by credit card, which makes it a great gift card sink. You might want to check into the situation where you live.

Update: 1/9/2011: Thanks QL_714 for mentioning that pennyful dropped its AmEx gift card rebate from 1.5% to 1%.

Update 1/9/2011: To monitor these rebate rates, see http://www.cashbackwatch.com , as recommended by frugaltravelguy.com's 1/3/2011 blog entry.

Last edited by skynerd; Aug 28, 2011 at 11:28 pm Reason: giftcards.com opportunity is not available
skynerd is offline  
Old Jan 9, 2011, 12:38 am
  #35  
 
Join Date: Sep 2009
Posts: 1,758
Originally Posted by skynerd
(or 1.5% by pennyful)
News flash, it is already down to 1%. I am sure it had nothing to do with being posted here.
QL_714 is offline  
Old Jan 9, 2011, 2:09 am
  #36  
 
Join Date: Jun 2010
Posts: 292
Originally Posted by QL_714
News flash, it is already down to 1%. I am sure it had nothing to do with being posted here.
Thanks for the update.

Here is why I think the rebate drops have probably been planned from the beginning. The explanation is a bit long and contains no immediately useful tips, so everyone feel free to skip it if you're not interested.

I've been told that many rebates changed around this new years, although I was not watching many other rebates myself. I do know that bigcrumbs went from 1.6% to 1.2% and then back to 1.6% in the first few days of 2011, and extrarebates dropped their giftcards.com rebate from 3% to 2.5%. These changes are consistent with the idea that a lot of these marketing programs are probably set on time boundaries convenient to the seller's budget process, such as quarterly, by the seller's fiscal year, etc.

In general, I would expect the rebate rates to continue to drop from the ~4.5% more than a year ago, not because people take advantage of the offer (that is what the sellers want: to introduce a lot of people to their product), but because of why I think the rebates are being offered: it's a brand war in a new product space. The difference between being Coke, Pepsi, Royal Crown, or Safeway Cola can be amount to a lot of money for virtually identical products.

Similarly, with gift cards, where you're basically committing a lot of money to be spent only on a single credit card processing network, if a gold AmEx gift card comes to be thought of as a classier gift than Discover gift card, that could be worth a lot of profit, especially for something that is being marketed as gift oriented, given that people often think very little of spending an extra $5 on wrapping paper, bow and card for a present. When a new product is crossing the chasm from early adopters to mainsteam (to borrow Geoffrey Moore's terminology), loss leading investments in establishing a brand can pay returns for decades.

I believe that in the case of gift cards, this is probably true for both the issuers and the major payment networks. For example, do you really think giftcards.com's recent $1.50/card rebate for MasterCard was not the result of some kind of incentive by MasterCard to giftcards.com?

Although I imagine there are more complexities to these deals, the likely future seems pretty clear to me. I basically believe that drops and a probably complete phase out of gift card rebates have been planned from the beginning by the issuers and card networks. Perhaps bargain hunting consumers will benefit from a similar battle for another developing market in financial services in the future, such as cell phone payment schemes.

Last edited by skynerd; Jan 19, 2011 at 1:37 am Reason: eliminate redundant words: "programmed in planned" --> "planned"
skynerd is offline  
Old Jan 9, 2011, 11:33 am
  #37  
 
Join Date: Apr 2003
Location: PHX & PPT
Programs: DL PM, IHG Plat, Hilton Gold, AmExPlat
Posts: 833
Another consideration I haven't seen mentioned is that, if your tax liability is greater than your normal spending on the credit card, it might impact your credit report and credit score. I paid taxes with an AmEx once a long time ago, and that one-time, paid-same-month charge showed as the "high balance" on that card for about two years. Be careful!
BarbiJKM is offline  
Old Jan 14, 2011, 8:44 am
  #38  
 
Join Date: Apr 2000
Location: Fort Myers, FL
Programs: Hilton Gold, SPG & IHG Plat, & every airline program that I can join
Posts: 2,279
This one has not been answered as yet, and that is if when using the BOA debit cards which still earn miles at 1/2, if you are using the debit option for the flat fee, does that generate miles on the tax sites? Seems like a good gamble for around $4

JudyJFLA
JudyJFLA is offline  
Old Jan 14, 2011, 10:05 am
  #39  
 
Join Date: Jun 2010
Posts: 292
Originally Posted by JudyJFLA
This one has not been answered as yet, and that is if when using the BOA debit cards which still earn miles at 1/2, if you are using the debit option for the flat fee, does that generate miles on the tax sites? Seems like a good gamble for around $4

JudyJFLA
Update 1/14/2011: No, you probably will not earn miles on a B of A USAir or Alaska Visa debit card, because B of A's terms are unusual in that they explicitly exclude tax payments. See the next message for details.

I suspect a Visa debit card is more likely to work, based on the following data points, all but the last of which are from the payusatax flyertalk thread:

1. DCBob SunTrust Delta Visa (not the new MasterCard) Delta debit card got miles and was only charged the ~$4 debit card fee (via payusatax?),
2. Ikar reported previously getting miles on a Chase Continental debit card,
3. But later, I reported *not* getting miles on a Chase personal non-preferred (1mile/2$) debit card.
4. Who hoo! My payment by valuepayment.com on my Chase non-preferred personal United Debit Visa just coded as earning miles this morning, and I was only charged the $3.89 debit card fee, on which I also earned miles (or perhaps just 1 mile).

Last edited by skynerd; Jan 14, 2011 at 10:33 am
skynerd is offline  
Old Jan 14, 2011, 10:31 am
  #40  
 
Join Date: Jun 2010
Posts: 292
Warning about paying tax with B of A debit card

"Does not earn miles for ATM transactions, cash-back amounts at point of sale, or for federal, state or local tax payments, or similar payments to federal, state and local government agencies." from the Bank of American USAir debit card description page at http://www.bankofamerica.com/deposit...eckcards_usair .

Oops! I forgot that the Bank of America USAir and Alaska Visa debit card are unusual in that their terms specifically exclude tax payments, which makes me think that Bank of America has filters in place specifically to catch this.
skynerd is offline  
Old Jan 15, 2011, 8:20 am
  #41  
Suspended
 
Join Date: Oct 2004
Location: Bay Area
Programs: DL SM, UA MP.
Posts: 12,729
Anyone use or consider using the Skymiles Platinum Amex to pay a large tax bill not only to get miles but also the 10,000 MQM mileage boosts for each $25k spent?
wco81 is offline  
Old Jan 15, 2011, 8:52 am
  #42  
 
Join Date: Apr 2000
Location: Fort Myers, FL
Programs: Hilton Gold, SPG & IHG Plat, & every airline program that I can join
Posts: 2,279
Thanks for the warning on BOA,
I forgot that Travelocity changed from MC to AMEX since my last tax deposit, so I had to go to the other site. The % is higher, but figured the $170 fee was offset by $300 in travel credit, so still came out ahead a bit. I figured it was a better deal than the paytax on MC $140 fee for 7500 CO miles.

JudyJFLA
JudyJFLA is offline  
Old Jan 15, 2011, 1:13 pm
  #43  
 
Join Date: Oct 2009
Programs: Delta Skymiles Platinum
Posts: 70
Originally Posted by wco81
Anyone use or consider using the Skymiles Platinum Amex to pay a large tax bill not only to get miles but also the 10,000 MQM mileage boosts for each $25k spent?
I passed all of my income taxes through my Amex Platinum Delta card last year & hit both spending threshholds, which garnered me 20k MQM's!

Kirby
EastcoasterWestcoaster is offline  
Old Jan 16, 2011, 12:54 am
  #44  
 
Join Date: Oct 2005
Posts: 106
Originally Posted by skynerd
So, if I understand correctly, the cheapest rates for paying US federal income taxes by credit cards are now:

MasterCard, Discover: payusatax.com 1.95%
Visa, AmEx: valuetaxpayment.com 2.29%
Mostly true, with one small (or very large depending on how you look at it) exception. If you pay over $100k of taxes with your AMEX, pay1040.com offers a convenience fee of 2.1%:

https://www.pay1040.com/SpecialOffer...anceTaxProgram
noam is offline  
Old Jan 16, 2011, 2:26 am
  #45  
 
Join Date: May 2002
Location: SAT
Posts: 371
The information shown here

Originally Posted by silverforumsurf
"The IRS does not receive or charge any fees for card payments. Additionally, the IRS cannot pay or reimburse any convenience fee to taxpayers. Convenience fees are charged by the service providers. The fee is a deductible business and individual expense. For an individual expense, taxpayers may deduct the fee as a miscellaneous itemized deduction subject to the 2% limit on Form 1040, Schedule A (see Publication 529)." IRS Website
is not 100% complete.

If you are an EMPLOYEE, then you would follow the above statements.

However, if you are SELF-EMPLOYED, then the "convenience fee" charged by the CC firm / Bank when paying your taxes would go on Schedule C (either on line 16b, 17 or 48).

This entry for a "convenience fee" is similar to Bank Account Management Fees for your Business Checking Account, and to Credit Card Interest charged on a CC used 100% for that particular business.

Putting the "convenience fee" on Sch C saves you from having to exceed 2% of your AGI for this item.

I have been doing taxes for 14 years -- three of which with the IRS -- and have never had a problem with this. But, as usual, YMMV.

Last edited by travis bickle; Jan 16, 2011 at 2:32 am
travis bickle is offline  

Thread Tools
Search this Thread

Contact Us - Manage Preferences Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.