Tax Time
 

So its almost 12/31 and soon we'll all be doing our taxes.

It occured to me that we can pay our US federal income tax using our credit card. And the website notes that all payments will be coded as retail purchase not cash advance. And we would not incur cash advance fees.

Have anyone looked into doing this to get miles? And maybe over paying your estimated taxes by ALOT and getting it all back in a few months while earning miles/points?

you can find out more at www.pay1040.com or www.officialpayments.com

Oh, we do that plenty of times ;)

Some credit cards would give you double miles for paying taxes, and Amex used to have this targeted promotion for 5,000 points, but not anymore :(

The fees seems to be around 2.5%.

I am thinking of flying first class to Asia late summer of 2005. If I over pay my taxes by... umm.. $160,000 I would get 160,000 points. And incur a fee of about $4000. But that is still cheaper than buying the first class ticket straight from the online to asia at around $7,500.

what do you guys think? kinda risky huh?

Usually the vigorish on those payments are so high that you wouldn't do it for the purpose of earning miles. We discuss it every year around tax time: occasionally there is a promotion that makes it almost a break-even proposition, but I've never personally seen a slam-dunk good deal using a CC to pay The Man via one of these services.

A 5,000 Starpoint bonus might make me bite, but somehow I doubt they'd ever allow such a promotion to be structured to my benefit. They'd tier/threshold it in a way that I was always overpaying for the points.

I've done a search and can't find a topic that talked about this prior years. can you guys give me some direct links? thanks!!

Problem is they charge a 2.5% (approx.) fee for the convenience of using your card. Not a good deal, in my opinion.

am thinking of flying first class to Asia late summer of 2005. If I over pay my taxes by... umm.. $160,000 I would get 160,000 points. And incur a fee of about $4000. But that is still cheaper than buying the first class ticket straight from the online to asia at around $7,500.


if you've got a card that will take a '160,000 dollar charge', go right ahead.

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Miles for Paying Taxes
 

United Visa has a promotion for double miles for paying your taxes, I believe thru 1/15/05 (don't have the details with me now-it appears this offer is not a targeted one and doesn't require any registration.) This promotion covers any taxes paid thru Official Payments-including property taxes and state taxes. I agree with other posters in that single miles at the cost of a convenience fee of 2.5% is too high. However, for me, double miles makes it worth it. We go on vacation to the Caribbean twice a year and coach alone is $800+ from California. So getting 80,000 miles by charging $40,000 in taxes and incurring a fee of $1,000 is still a good deal for us. I would not do it if I used miles for domestic trips as it seems you can almost always get cheap domestic fares if you are patient. Delta American Express will also probably have a double miles promotion-they usually do around 12/31 and 4/15 but I haven't seen it yet. Two things to be careful with on these promotions-at times they have limits on how many bonus miles you can earn (the United offer does not have any limits) and the cards themselves have limits on how many miles you can earn in a year if you don't have status with that airline.

Do you have any major tax bills that come due on 1/15? (Do you pay quarterly perhaps?) For the folks who have their balances due on 4/15, paying $40,000 three months early is going to cost you a heckuva lot more than $1,000!

Tricky promotion making it a Jan 15 deadline: for one, a lot of people don't even have the required data to file by then. (I seem to get all of my 1099's in early Feb.) Two, anybody who pays their 4/15 balance due in January is being too nice to The Man. ;)

Info on and links for earning miles for preparing and paying your taxes can be found on the Finance page of my website, Free Frequent Flyer Miles.

I'm not sure why this topic is discussed so much each year because the math is straightforward. If you owe, say, $5,000, you pay $124.50 and get 10,000 miles with a double-miles offer. Would you pay $124.50 for 10,000 miles - 1.24 cents/mile? If yes, do it; if not, don't.

The reason why I posted this is because...

1. You can technically pay more than you owe in taxes and get it all back from the IRS in a month or two after you file. So techinically you can get as much mile as you want if you want to pay the 2.5% fee.

2. The 2.5% fee may not sound so bad if you are trying to get 180,000 miles for a first class ticket to asia (which is usually around $12,000 on JAL). As oppose to about $4,500 that you are paying in fees.

The only problem is that I will have to pay $180,000 before I get my money back and its quite risky! And I doubt amex will let me charge that much though once!

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I never tried charging $180,000 on my Gold Card--but I have a feeling that AMEX might question a charge of that amount, even if it was to Uncle Sam.

My other thought is that AMEX generally sets up their promotions and programs so that they can't easily be turned into ATM's or airline ticket counters.

In theory, if you had all of your tax forms lined up and ready to do an efile, then pressed the button to efile and then immediatedly clicked over to Official Payments web site and paid them what you had claimed to prepay on your efiled tax forms--you could get your refund back before the end of an AMEX billing period--assuming you used direct deposit for the refund.

Tax Payments
 

Yes, I do pay quarterly taxes. I would agree with you-I wouldn't pay three months early to get the miles. As it is, by paying with the credit card not only do I get the miles but I get a deferral until late February to come up with the cash. But I still wouldn't do it except for double miles and for a regular quarterly tax payment.