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

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

Old Jan 16, 2011, 2:54 am
  #46  
 
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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?
If you have a large tax bill and a Amex Delta Reserve card, you can pay exactly $60K in taxes with the card for ~$1,400 in fees. If you expense those fees, your net cost might come out to something more like $800. For that $800, receive 60K base RDMs plus 30K threshold bonus RDMs for a total of 90K RDMs. In the end, you've paid about .9 cents per SkyMile. Not bad, *especially* as you also get 30K MQMs, which go a long way towards status with Delta. If you hold GM+ status with Delta and travel primarily domestically, you can leverage Medallion award inventory, award ticket upgrades, and change/cancel fee waivers (if PM+) to really leverage those miles and get far more than a cent value out of each. I use many for last-minute first-class business and leisure trips at 25K each (I'm DM, so my upgrade rate is near perfect).

Even better: If you have the flexibility to time your payment to coincide with a promo, wait for one similar to the one from last fall, where double miles were offered. That would have yielded 150K RDMs instead of the 90K, bringing your cost down to nearly half a cent per mile.

Even better yet: If you have two Reserve cards (one personal, one business) or your spouse has one or two, and your tax bill is very substantial, do this multiple times over. While doing it with one card gets you SM status from the 30K MQM kicker, doing it with two cards gets you GM, three cards gets you PM, and four cards leaves you a hair short of DM. If you do this rapidly and to completion before March 1st every *other* year, as status lasts the entire current year plus 14 months beyond, you can keep your resulting status as permanent. Consider switching off with a spouse or business partner to keep both of you in the elite ranks!
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Old Jan 16, 2011, 3:07 am
  #47  
 
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Originally Posted by mooper
If you have a large tax bill...
Why do you need a large tax bill?
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Old Jan 16, 2011, 3:16 am
  #48  
 
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Originally Posted by QL_714
Why do you need a large tax bill?
Typically, those who are willing to charge $60,000 (let alone multiples of it) and give the proceeds to the government are seeking to do it permanently (i.e., if they have a large tax bill to pay, estimated taxes due, etc.) Of course, you could pay beyond what you owe (or expect to owe) and have it refunded later, but you'd want to consider the cost of tying up large sums of money while you wait to get it back. For example, $120,000 being gone for 3 months that would grow at a 10% annualized rate (long term stock market return) otherwise is costing you $3,000 in forgone returns. If you could turn it around in a couple weeks, it would be a different story, but I don't think there's a way to get overpayments back that quickly - is there?
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Old Jan 16, 2011, 5:18 am
  #49  
mia
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Originally Posted by skynerd
..., 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%
Now 1.90% for Mastercard (only) at a separate site created by Official Payments Corporation:

https://mastercard.choicepay.com/mcfed/index.jsp
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Old Jan 16, 2011, 2:38 pm
  #50  
 
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Originally Posted by mooper
If you have a large tax bill and a Amex Delta Reserve card, you can pay exactly $60K in taxes with the card for ~$1,400 in fees. If you expense those fees, your net cost might come out to something more like $800. For that $800, receive 60K base RDMs plus 30K threshold bonus RDMs for a total of 90K RDMs. In the end, you've paid about .9 cents per SkyMile.
Well, SkyPesos -- er, SkyMiles -- are worth less than a penny each, so it doesn't seem to be much of a bargain. Plus, it's nearly impossible to redeem them anyway, in my experience.

Now, if you can find an equivalent deal for Starpoints, please let me know. $60K would give you 60K Starpoints, which are worth something!
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Old Jan 16, 2011, 5:15 pm
  #51  
 
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Originally Posted by Counsellor
Well, SkyPesos -- er, SkyMiles -- are worth less than a penny each, so it doesn't seem to be much of a bargain. Plus, it's nearly impossible to redeem them anyway, in my experience.
There are a lot of people who try to redeem SkyMiles for international travel - the realm in which they tend to have very limited low/saver inventory (as Delta does the vast majority of their business domestically) - and find very low value as a result. However, if you redeem SkyMiles for award travel wholly within the 48 contiguous states as a Medallion member - especially within 4 months of your travel date (as Delta releases inventory in batches, not all in advance like many peers) - you can easily achieve 2+ cents per mile. No last minute booking or bag fees as a Medallion member, either. Even better, if you are GM+, you can use 25K miles to get first class award flights (upgraded at window), and if PM+ you can change/redeposit unlimited times, free. I use my SkyMiles this way and have actually been approaching a 3 CPM value as of late. Very hard to get that sort of value out of peer airlines domestically, albeit achievable internationally. Summary: mileage value all depends upon status, knowledge, and usage patterns. Your dirt is my gold.

PS> The floor value on SkyMiles for Amex cardholders is one cent even, as you can use them as a cash-equivalent with the "Pay With Miles" feature to purchase tickets at that rate. Therefore, if you don't fly domestically and can't utilize them for 2+ CPM as described above, at the very least you should be redeeming them for 1 CPM (not that I'd recommend it, but that's better than wasting them at the value at which you redeem).

Last edited by mooper; Jan 17, 2011 at 11:39 am Reason: added PS
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Old Jan 17, 2011, 3:33 pm
  #52  
 
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Would This Actually Work?

Originally Posted by mooper
If you have a large tax bill and a Amex Delta Reserve card, you can pay exactly $60K in taxes with the card for ~$1,400 in fees. If you expense those fees, your net cost might come out to something more like $800. For that $800, receive 60K base RDMs plus 30K threshold bonus RDMs for a total of 90K RDMs. In the end, you've paid about .9 cents per SkyMile. Not bad, *especially* as you also get 30K MQMs, which go a long way towards status with Delta. If you hold GM+ status with Delta and travel primarily domestically, you can leverage Medallion award inventory, award ticket upgrades, and change/cancel fee waivers (if PM+) to really leverage those miles and get far more than a cent value out of each. I use many for last-minute first-class business and leisure trips at 25K each (I'm DM, so my upgrade rate is near perfect).

Even better: If you have the flexibility to time your payment to coincide with a promo, wait for one similar to the one from last fall, where double miles were offered. That would have yielded 150K RDMs instead of the 90K, bringing your cost down to nearly half a cent per mile.

Even better yet: If you have two Reserve cards (one personal, one business) or your spouse has one or two, and your tax bill is very substantial, do this multiple times over. While doing it with one card gets you SM status from the 30K MQM kicker, doing it with two cards gets you GM, three cards gets you PM, and four cards leaves you a hair short of DM. If you do this rapidly and to completion before March 1st every *other* year, as status lasts the entire current year plus 14 months beyond, you can keep your resulting status as permanent. Consider switching off with a spouse or business partner to keep both of you in the elite ranks!
I see some possible flies in the ointment; maybe others can say whether these would be real problems or not:

(1) Could you "expense" the annual fees on a personal card? And could you "expense" the credit card surcharge for paying personal income taxes? Based on comments above, it appears that you can't expense the annual fee or surcharge unless you are self-employed, you are paying taxes for a business, or your miscellaneous deductions exceed 2% of your income.

(2) All of the credit-cards-for-taxes services accept only two credit card payments toward each tax bill due. And Amex generally will not let you charge more than your credit limit during one monthly cycle, even if you pay the balance early. If your credit limit is, say, $20K (which Amex usually tells people is the maximum, although there are exceptions), how are you going to charge $60K, much less more than that?

(3) The fine print on the Reserve cards says that you can have more than one Reserve card, but you won't get more than one bonus a year if you do. Does this rule apply when you have one personal Reserve card, and one business Reserve card? (I see no problem with husband/wife cards, as long as the spouse transfers the bonus within the prescribed period.)

(4) Doing the tax charges "rapidly and to completion" by March may not get you the MQMs until after 12/31, because the MQM bonuses are calculated based on annual usage. If so, then getting close to two years of status for one year of heavy charging would not work.

Actually, I would like to see Mooper's strategy work, but I'm wondering if it, in fact, would.

Last edited by Ferdinand Magellan; Jan 18, 2011 at 8:41 am
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Old Jan 17, 2011, 3:48 pm
  #53  
mia
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Originally Posted by Ferdinand Magellan
... only two credit card payments toward each tax bill due...
This wouldn't be an issue if you were using the service to pay estimated taxes over the course of a year, rather than merely paying the balance due on the return for the prior year.

$20K (which Amex usually tells people is the maximum),
Some posters believe that in the post credit crisis environment lines over $25,000 require a qualitatively different level of documentation, but I haven't read any convincing evidence for that assertion. Many cardholders could make a single payment of $60,000, but that wouldn't be necessary to "buy" DL status in this fashion.
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Old Jan 18, 2011, 9:50 pm
  #54  
 
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Any reasonable way to pay income taxes with coins? That would be (kind of) in the spirit of the program, and I could certainly go through quite a few coins on income taxes. Is there anywhere to "locally" pay income taxes with no fee?
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Old Jan 19, 2011, 6:10 am
  #55  
 
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Originally Posted by Ferdinand Magellan
I see some possible flies in the ointment; maybe others can say whether these would be real problems or not...
1) You definitely need to run the expense through a business of some type. For those without a corporation, a Schedule C company is easy enough to run.

2) If you're trying to do everything in one shot around April, then you're correct. Those who have $60K+ tax bills are likely to have substantial credit lines too, but as you correctly noted, large lines aren't as easy to come by as they used to be.

3) The business and consumer (personal) versions of the Reserve card are counted separately. I've earned the full bonuses from both versions for three years running, as has my wife. I have business partners who have done the same.

4) While you're correct that the threshold bonuses (RDM and MQM alike) are based upon annual spending, as soon as they are reached, they post. Amex doesn't wait until the end of the year to check if you've reached the thresholds. Rather, they award you as soon as a statement closes that shows you've reached the mark. Therefore, if you have a $30K credit limit on a Reserve card, you could hit it once (say, for estimated taxes) in the first week of January, pay off the balance online, then hit it a second time, reaching $60K. When the first statement of the year closes, your full 90K RDMs (30K of which are bonus) and 30K MQMs will post (and more RDMs if a bonus happens to be going on, though they typically run later in the year... none this year, so far.) If you do this with enough cards/people to get your MQMs to the desired status level, it will remain valid for all of that year, all of the next year, and until March 1st of the one after that. In that expiring year, just re-do the process, and you've got continuing status.

Originally Posted by mia
Some posters believe that in the post credit crisis environment lines over $25,000 require a qualitatively different level of documentation, but I haven't read any convincing evidence for that assertion.
As someone who went through a period where I was applying for as many cards as possible to finance my business spending (in 2007, hit a peak of 23 different cards, $640,000 in total credit lines, never rejected), I can tell you that credit approvals and lines granted have *drastically* changed. Despite my credit score being as solid as ever (even better, as I've closed many of the cards/lines, never having had a blemish occur), when I apply now, I sometimes need to provide substantial documentation before being approved, and once approved, I rarely see the generously large lines right off the bat that I used to. Aside from my experience, I have several colleagues with similar backgrounds who have experienced the same. Only a small sample of people, but enough to at least tell you that it has changed a lot for some of us.
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Old Jan 19, 2011, 8:13 am
  #56  
 
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Originally Posted by mia
Now 1.90% for Mastercard (only) at a separate site created by Official Payments Corporation:

https://mastercard.choicepay.com/mcfed/index.jsp
I also see it at the Mastercard site. Wish I noticed this earlier:
http://www.mastercard.us/tax-payment.html
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Old Jan 25, 2011, 4:36 pm
  #57  
 
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Apparently only two weeks to order United Mileage Plus debit cards

"The third largest debit-card issuer as of 2009, JPMorgan Chase & Co. in New York, will stop issuing debit rewards cards on Feb. 8, according to spokesman Tom Kelly. [...] Existing rewards programs will continue for now, said Kelly." -- from http://www.bloomberg.com/news/2011-0...after-cap.html pointed to by frugaltravelguy.com .

My tax payment less than a month ago at valuetaxpayment.com with my non-preferred Chase United Mileage Plus debit Visa card was charged at the debit rate of a flat $3.89 but was classified as a mileage earning transaction. It looks like there may be only two weeks left to get this card or the "preferred" version (1 mile/$ instead of 1 mile/$2, but $65/year instead of $25/year).

I believe there are "business" variants of these cards, and I suspect that issuance of them will also be suspended.

In comparison, my tax payment through payusatax.com with my Chase Continental non-preferred personal debit MasterCard did not earn miles. I do not know whether this difference in rewards is due to a difference between Visa or MasterCard (each payment was processed for a flat $3.89) or because valuetaxpayment.com, a new vendor, was too new to be on some debit card rewards black list.

Last edited by skynerd; Jan 25, 2011 at 4:44 pm
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Old Feb 14, 2011, 12:27 pm
  #58  
 
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Miles for tax returns?

It's that time of year again. Normally, I file these myself, but I was wondering if there's any companies offering miles for their services?
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Old Feb 14, 2011, 1:01 pm
  #59  
 
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Ok folks. i have a 10K tax bill to the IRS. I am planning on paying half of it before April 15th in one lump sum (i.e 5K). Rest will be payed off in installments of 1000 per month. I got Citi MC/Visa/Amex and SPG Amex. Any ideas?
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Old Feb 14, 2011, 4:32 pm
  #60  
 
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Originally Posted by mjfink
Any reasonable way to pay income taxes with coins? That would be (kind of) in the spirit of the program, and I could certainly go through quite a few coins on income taxes. Is there anywhere to "locally" pay income taxes with no fee?
I would take them down to your local IRS office and give it a try! It might help if they are still in the $25 rolls. I know they take bills because I have seen people paying with them. I am a retired CPA so have spent some time in the local office.
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