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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 Nov 16, 2010, 3:57 pm
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Paying USA income, property or other taxes with CC. [2010-2012]

I have never been in the situation I soon will be where I don't have income taxes taken out of pay checks. is there a way to pay income taxes with a credit card to rack up the miles? I would imagine there are fees associated with this.
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Old Nov 16, 2010, 4:16 pm
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Originally Posted by dnkywhisperer
I have never been in the situation I soon will be where I don't have income taxes taken out of pay checks. is there a way to pay income taxes with a credit card to rack up the miles? I would imagine there are fees associated with this.
There are ways. Here's one: http://www.officialpayments.com

There are others, but that's the one I know first hand. As a self employed person paying quarterly estimated taxes, I use this method in situations where I know I'd otherwise be purchasing miles for some award need anyhow.

It can get expensive: the cost is generally about $0.0235 per dollar paid (miraculously close to what Amex charges to purchase miles in its MR program!) so proceed with caution!
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Old Nov 16, 2010, 4:34 pm
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That's the site I use.

As sfernando points out, it's a definite trade-off between racking up the miles and racking up the service fee for paying with the cc. I nevertheless do it. It can be particularly useful if that payment helps you get over the hump in terms of qualifying for bonus points (e.g., the recent Citi AA offers of 75,000 points for $1,500 in spending within a given period) or if it helps you obtain or retain status (e.g., Hilton Honors Surpass Amex securing Diamond status with a calendar year spend of $40K).
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Old Nov 16, 2010, 4:47 pm
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Payusatax.com is another. I think they charge closer to 2%, but I don't think they take visa or amex for estimated payments.

Incidentally, one of these web sites says that the service fee is deductible as a business expense (subject to the 2 percent AGI requirement). I'm not sure whether this is true, but if your tax professional says yes, it reduces the effective cost.

2 to 2.3 cpm is a bit steep for me, but I did it in order to get the 100k AA citicard instead of the 75k one. I figured that paying $200 or so to meet the extra 8.5k spend requirement was worth it for an extra 25k miles (plus the 8.5k miles earned on the purchase). In situations like that, where you couldn't meet a spend requirement another way to get a bonus, I think it's a good thing.

Other places it might be useful include cards that give EQM you need for a spend you can't otherwise reach (like the USAir Barclays card).
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Old Nov 16, 2010, 4:50 pm
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I use payusatax.com It is 1.95% for a credit card. If you have the Travelocity Amex card you get 4% back in travel at one level so you can actually make a 2.05% profit, more if you can deduct the fee.

JudyJFLA
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Old Nov 16, 2010, 5:44 pm
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the fee is not tax deductible

The fee to pay taxes via credit card is not a deductible expense, although many people do so and have not been caught.
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Old Nov 17, 2010, 4:58 pm
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Originally Posted by gnomie
The fee to pay taxes via credit card is not a deductible expense, although many people do so and have not been caught.
Per the FAQ on the Officialpayments site:

Generally, when this fee is paid or incurred by a business, it can be deducted as a business expense. Typically, it is not tax deductible for the payment of personal taxes or for the payment of other government obligations. We advise you to consult with a tax professional regarding the tax deductibility of the convenience fee as it pertains to your particular application.

Originally Posted by Thunderroad
It can be particularly useful if that payment helps you get over the hump in terms of qualifying for bonus points (e.g., the recent Citi AA offers of 75,000 points for $1,500 in spending within a given period) or if it helps you obtain or retain status (e.g., Hilton Honors Surpass Amex securing Diamond status with a calendar year spend of $40K).
A couple other examples where it might make sense, especially if you have a large tax bill/estimated tax and you can assign the expense to your business and get the effective cost down to, say, 1.5%...

1) Charge exactly $60,000 to a Delta Amex Reserve card, earning 1.5 RDMs per dollar plus 30,000 MQMs. (You can get 2.5 RDMs per dollar if you time it with a double-miles promo, like the one that took place this fall.)

2) Charge a Chase Marriott Visa Premiere card $180,000 less ($3K * however many EQNs you already have) to add to the 15 EQNs you get for having the card to obtain Platinum status with Marriott. Do this every *other* year in January, and you'll maintain Platinum status endlessly. For at least this year, any EQNs beyond a tier status will count double, as they will roll over *and* they will count twice towards lifetime status, too. I took the opportunity to load up on a lot of nights this way, earlier this year, putting me in a good position for Lifetime Platinum in a few more years.
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Old Nov 19, 2010, 4:42 pm
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I used the same site last year.
Originally Posted by JudyJFLA
I use payusatax.com It is 1.95% for a credit card. If you have the Travelocity Amex card you get 4% back in travel at one level so you can actually make a 2.05% profit, more if you can deduct the fee.

JudyJFLA
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Old Nov 20, 2010, 7:07 pm
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Or certain debit cards by a certain bank( sun trust )
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Old Dec 5, 2010, 1:46 pm
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Hmmm.... I have a colossal personal tax payment coming up in December (Federal and State) that I'd like some way to take advantage of. Its over $1.2 million.... I have the Morgan Stanley World MC, which gets points in their program that can be used for anything, so as a junkie, if its the right number per mile, I'm willing to pay up big for enough miles/points.

Any advice would be very helpful. Crazy or no?

I dont need status on anything, as I get it by flying. But I love to use miles for friends/family, and cant get away from earning over 1 million miles in one transaction....
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Old Dec 5, 2010, 4:35 pm
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Originally Posted by AirJunkie
Hmmm.... I have a colossal personal tax payment coming up in December (Federal and State) that I'd like some way to take advantage of. Its over $1.2 million.... I have the Morgan Stanley World MC, which gets points in their program that can be used for anything, so as a junkie, if its the right number per mile, I'm willing to pay up big for enough miles/points.

Any advice would be very helpful. Crazy or no?

I dont need status on anything, as I get it by flying. But I love to use miles for friends/family, and cant get away from earning over 1 million miles in one transaction....
For most, the points/miles alone aren't worth the transaction fee. However, when you stack some bonus opportunities, usually achieved through hitting thresholds, it can make sense. I gave a couple examples in post #7 above where you could spend right up to the threshold needed to achieve your objectives.

You should also evaluate other ways of earning rewards through card spending, including hitting spending thresholds. Buying coins from the US Mint, for example. It's not for everyone, but can be preferable and cheaper for some.

Yet another consideration is what kind of points/miles/awards you are earning. Many of us value Starwood (SPG) points much more than other hotels or airlines, but it really depends upon your usage patterns. Also, SPG points typically don't earn much at various thresholds, though there are periodic conversion bonus opportunities.
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Old Dec 6, 2010, 3:04 am
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I paid my 2009 taxes on my Marriott Signature Visa. The only fees I paid were the standard APR on the credit card. No extras. I got a hell of a lot of points, but I am also still paying it off, so the interest is killing me a little deep down. However, it was either that or set up another payment plan with the government and I'm trying to get them out of my bank accounts for the first time in 20 years. (self-employed and always screwed by the feds)

JB
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Old Dec 6, 2010, 3:05 am
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Good to know!
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Old Dec 6, 2010, 5:16 am
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Here is the IRS site that lists authorized payment links:


http://www.irs.gov/efile/article/0,,id=101316,00.html
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Old Dec 6, 2010, 5:36 am
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payusatax.com thread

Here is a related flyertalk thread, mostly focused on payusatax.com: http://www.flyertalk.com/forum/miles...satax-com.html .
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