Tax Payment Bonus Thread
 

It might be helpful to have the 2006 promotions all in one place. (I charge enough taxes in a year to, with double miles, end up with a few free trips, so programs I don't even normally care about would be of interest if the deal is good enough).

United MP Visa - Double miles, with no limit, for all of 2006.

(Haven't yet heard from Starwood, which last year had a 5K limit, and time limit).

Please list mileage bonus (such as "double"), any cap on miles, any time limit (i.e., April 15, or all year), and any cap on earning for non-elite of an airline/hotel card.

SPG is up:
https://www.pay1040.com/Terms_Starwood.aspx
Basically same as last year.

Delta as well. See: http://www.andrewcram.com/tax.html

Even if you have a refund for 2005, you can make an estimated tax payment for 2006 (whether you need to or not). This can really pay off:

Example: Charge $5,000 and pay a fee of $124.50. Receive 10,000 SPG points, which can buy 1 night at the Sheraton Park Lane in London. Cheapest rate at the Park Lane is around 149 pounds = $260.

Net gain = $135.50, or more than a 50% discount on the room.

no kickers to this, are there?
 

Does the processing fee fold in, so that one would wind up with a total of 10,124 SPG points (or 10,249?) for paying $5K in taxes with the card? Are such payments treated like a purchase of goods rather than something like a cash advance, starting an immediate accrual of additional interest charges? (I am interested in doing this, but want to be sure there are no kickers, only the upfront fee for charging the tax payment to the card.) One gets the usual one-month or so float on the money?

Except, assuming you don't need to make an estimated payment, you are losing out on a year's interest on that $5,000. Lots of banks paying 4.25% out there, so the lost interest is 5000*.0425=$212.50. $212.50+$124.50=$337>$260.

(Ignoring taxes, and assuming interest rates stay at 4.25% for the rest of the year.)

The payments are treated as "purchases", not "cash advances", so you still have the float! :D

Don't know y'all but I have to pay 100+k ... does it make sense to use the CC and pay an extra 3.5k in fees for dam points?? Uncle Sam did it again...

"Ignoring taxes" is convenient, but since it would consume 28-35% of the interest, not vary fair while doing the comparison

$337 less 35% taxes (Fed and State, maybe higher) = $220 < $260


SVO has a current offer for bonus points to sign up for the SPG card, on top of the normal bonus and waving the first year's fee. With over $5K due, it may just be worth the transaction.

Losing a year's worth of interest doesn't make a whole lot of sense, even with you best case scenerio, you are talking about $0.03+ for a point/mile. However, if one can make an estimated tax payment right now for 2005, then wait a month to file the return and getting the refund back, then no losing of interest, and cost of $0.012 per point may not be a bad deal.

I've crunched the numbers on the double miles deals, and I usually end up with 1.2 or 1.3 cents per mile as the cost, after considering everything. I recently used 140k DL miles to fly F on Singapore Air, and believe me, it was well worth $1,820.

How do you figure "an extra 3.5k"? I thought the fees worked out to just a bit more than 2.5% (2.6?), which wouldn't be very appealing were it not for the double miles. And I believe the double miles deal is out there for payment of any taxes, personal or business, estimated or annual.

I always end up owing The Man about $4,000-6,000 on April 15th. Double Starpoints...that's a no-brainer! ^

Well, that was my exact 2005 scenario. I figured it was worth it for 2 int'l F tickets to Europe (with UA double miles)

You have complete control over your W-4. You can start taking out less in taxes now and make the estimated payment at any time during the year. As long as you meet the appropriate test (and you must be careful), you can always get your miles without any lost interest.

just do the math. 2.5% on 100+k generating a 3.5k fee means that my tax payment is around 150k (guess i hate putting this dam number on paper as its been haunting me since last week when my accountant told me... but hey wish I had to pay 100+mm) :D

I guess y'all r right... I will get some good miles at a decent cost. However I use Starwood Amex and the double points is up to 5k... Don't have UA and usually use NW/DL/AA... does it make sense to load the expense all on starwood amex? If you had to charge around 150k of taxes to your credit card how would you do it??
I HATE MILES AND POINTS! they drive you to do things you otherwise wont! ;)

IMPORTANT: (I don't put that on too many of my posts): Check the details of the double miles offer as well as the mileage limits (if any) on your card. You might be in for a nasty surprise if you've charged more than either of those limits.

The reason I used $5,000 in the SPG example is because that is the MAXIMUM amount for which you can get double points. So don't do it above 5K!!

So far, the 2x SPG is the only offer I've seen here that is worthy of paying the upfront juice - even if you have $150k of available credit to spend and even if you can spread it across a bunch of mileage cards. Would I pay 2.5c cash right now for 2 UA miles? Not unless I had a very immediate, high-yield use for those miles and didn't have another way of getting them.. Would I pay it for 1 SPG? Hmmmm.....tougher call, but no.

Honestly, I'd run $5k on my SPG Amex and cut a check for the other $145k unless your situation absolutely requires those miles ASAP for a "perfect" redemption opportunity.

Yes, the question comes down to one's ability to use the miles in advantageous ways. That usually means the ability to plan far in advance, or to be able to leave on short notice when award inventory opens up.

Citibank AAdvantage reduced fee tax payments
 

Just saw an offer from Citibank Aadvantage MasterCard offering a reduced "convenience" fee of 1.99% on FEDERAL tax payments (reduced from the "standard" (wonder who set the "standard") fee of 2.49%. Valid to April 17, 2006 for payments made through www.officialpayments.com/caoffer.jsp. User must be primary cardholder or authorized user (darn it, I wanted to pay my taxes with someone else's card). Offer doesn't say you have to have received the offer, i.e., apparently not targeted.

Personally, I wonder about the value of paying 2% extra in taxes just to get some miles. I guess a month or so of float is worth something, maybe, to be generous, 0.3%.

I try to maintain a rule to pay nothing extra to get miles.

Too bad there are no way to get miles for a REFUND *doin' a little dance* ;)

Not a stretch to see a deal in 1.25 or 1.3 cpm (2.5% or 2.6% when 2 miles/$1), but 2 cpm (1.99% with 1 mile/$1) is not so appealing.

Am I right that for the double miles offer on tax payments there is no limit amounts of $s spent and miles earned with UA Platinum Visa, but $5K cap (and 10K points) with SPG AmEx?

how many miles per $1 in fees
 

OK, treat as a "purchase," not "cash advance," so no accelerated payment schedule and do get float. Does the fee portion of the payment (as opposed to the tax portion) earn double miles too, or just the usual 1 mile for $1 charged?

Okay, how about this:
 

1. Pay $5,000 tax due using Starwood Amex and pay $124.50 in fees.
2. Pocket 10,000 Starpoints.
3. Do a balance transfer to another credit card with 0% interest for 12 months, no transfer fee.
4. Put $5,000 in an HSBC savings account (4.80% APY) or get a 12 month CD. Total return after 12 months = $240
5. Net: $240 (interest earned) - $124.50 (fee) = $115.50
6. Total: $115.50 + $125 (assuming 10,000 Starpoints worth $125) = $240.50

3. Do a balance transfer to another credit card with 0% interest for 12 months, no transfer fee. Have I been missing out on a good thing, that is free money? I have always ignored come-ons to transfer balances from one card to another because I try never to carry balances and because I have always assumed it would not be a good deal. Don't they treat transfers something like cash advances, imposing an upfront 2% or 3% fee? There are cards that would invite you to transfer $5K in debt over to them and let you have the use of that money for up to 12 months with no interest or other charges for the privilege? Which cards are that generous/stupid?

Re:
 

http://citi.bridgetrack.com/usc/plat...8F25966E9426E2

I don't carry balances either so haven't actually done it. But what if you apply for the above card, do the no-fee balance transfer from Starwood Amex and not use the card for 12 months. That is the key, not use the card. Because if you use the card, the payment you make will apply to the balance transfer amount, and your purchases will continue to accrue interest until you pay the whole thing off. That is how they get you.

This is discussed in the Credit Cards - Important Starting Info section of the following website:

http://www.freefrequentflyermiles.com/index.htm


* Some cards offer a limited time 0% interest on balance transfers. These can be quite useful, but consider:
o The transfers often do not earn miles.
o Often there is a 3% fee for the transfer. Frequently this is capped at $50 or so per transfer, so a very large transfer might be worth the fee. Do the math.
o Payments are always credited to the lowest interest rate debits first. This means that if you actually charge purchases to the card, you will be paying interest on those purchases, usually at a very high rate, until you completely pay off the card. So if you make a 0% balance transfer to the card, be sure that you have not and will not make purchases on it.
o You must make the minimum payment each month to keep your 0% rate. I am told that it will help your credit score if you pay at least $1 more than the minimum each month.
o My Holy Grail of credit cards would be one that offers 0% interest for balance transfers, charges no fee for the transfer, and gives miles for that transfer. If you find it, please let me know.

Here is a little known fact about Citibank 0% balance transfer, no fee offers: You can call to get the "transfer" immediately sent to you as a check. It charges to your credit card as a balance transfer, not a cash advance. Free loan, no fee, no interest for a year.
o Ask for a "Direct Check" for $1 less than the full credit limit of the card (they won't give you the full limit).
o Very carefully confirm that there will be no fee and 0% interest.
o Carefully listen to the script they read to you before doing the final transaction. It should confirm 0% and no fee, and tell you when you have to pay off the loan.
o If the rep doesn't know how to do this, ask for a supervisor.
o Put the money you receive in an interest bearing account and pay $1 over the minimum (for less impact on your credit score) each month from that account. A Virtual Bank or ING Bank account would be fine for this. (See the bottom of the Banking section of my Finance page.)
o Or, if you are sufficiently financially disciplined, pay down a higher interest loan (such as a home equity loan) with the check. Just be sure you will be able to pay off the 0% loan when it becomes due.
o Be sure to read my cautions on 0% balance transfer offers above.

I wonder, if Delta says you get lifetime status for 1 million miles earned through credit card and/or actual miles, wouldn't it be beneficial to spend the 150k for 300k miles and in a couple of years he will have bought lifetime elite status from Delta along with actually being able to use the 1 million miles for free tix? Just a thought.

By the way, this is post 90 for me. :cool:

If would be great if I could get double AA miles for it.
That would be 300K toward awards, PLUS 300K toward my 2 Million Mile goal for Lifetime Platinum. 2 MM gets you 4 EVIPS, so consider 300K to be 6/10 of an EVIP (plus the PLT bonuses you will get sooner, if you don't usually qualify for PLT, and the int'l AC club access)
To me, that would be worth 3500

I think DL's lifetime levels are based on flown miles. (Not 100% sure, but that's how they used to be.)

AA counts all sources though. Just haven't ever seen an uncapped 2x offer for them...

That is correct. It's been that way since they switched to SkyMiles in 1995. Prior to that they counted all miles from all sources, as AA still does. They grandfathered all the "all miles" totals into the new program but counted only flown miles, including minimum flown miles credit for short flights, from then on.

So, putting the tax bill for your Powerball grand prize on a credit card won't get you a bit closer to lifetime Delta status. Of course, if you win the Powerball grand prize, you can buy your own 767 so it wouldn't matter.

(Confirming just to remove any doubt left by the "I think" in the quoted post.)

Too bad too because 2x MR + 20% bonus on transfer to Delta would have been sweet! hehehe. So, guess you need to find a program like AA that allows all miles, not just flown.

Why is there a 'fee' to pay taxes using cc's? Who charges it? The IRS or the CC's? Is there a way to get around paying this fee?

Exactly my point. It might make sense up to a cetain level but does not justify extra K's for points/miles unless you have a super-specific reason/plan and now how to get to it quick. I am going with Pinniped's idea... load on 5k via SPG amex and cut a check for the rest... truely awesome how fast the Department of Treasury cashes checks...has anyone ever noticed?

This is the approach I took last year. Remember you can do 5K on your and 5K on your wife's card if she has a separate SPG Amex account.

There is a "'fee' to pay taxes using cc's" because if there were not a fee, you would have the FFP equivalent of a perpetual motion machine, and there are no perpetual motion machines.

Credit card companies do not fulfill their simple existential purpose, that being to make gobs of money for themselves, by advancing you money and also giving you valuable consideration (airline miles) for the privilege of doing so in return for nothing other than your possible gratitude. While a great many merchants will subsidize that extension of credit and grant of other benies to you by paying the credit card company in the range of 2% to 4% of each card transaction, the IRS sees no reason to accept less than 100% of what they think you owe them. So when the IRS is on the other side of the deal, you must be the one to pay the credit card issuer their "vigorish." Some of us think, though, that this may be one instance in which the "vigorish" makes sense.

So, if you could buy say 100K miles on your favorite carrier right now for $1,250 (1.25 cpm), you wouldn't do it? For $1,000? For $750? They just couldn't be cheap enough to whet your appetite?

Your personal "rule to pay nothing extra to get miles" may mean that you are missing out on some very good deals.

Hmmm. If we got down to under $1,000 for 100k miles on one of the legacy carriers, I'm listening. For AA, I'd do it in a heartbeat. For UA, I'd hesitate for a minute, and then do it. For US, I'd closely examine whether I'd really use 'em in 2006 or 2007 and what my ROI would be.

For the other three, you gotta get down to about $500 before I'm even going to nibble.

Actually, neither of the above. When you pay your taxes with a credit card, you're actually paying a third party such as Official Payments Corporation. The third party then pays the IRS. The third party also adds a "convenience fee" for its services, which is OK with the credit card folks because they don't offer the same service for less if you pay a different way.

Say your tax bill is $100. You pay the third party $102.49. It pays the IRS $100. It then submits a charge of $102.49 to the credit card company and gets (since its volume entitles it to a darn good rate) about $101. Its profit margin is the difference between $100 and what it gets. The card issuer is out $101 it gives OPC, $1-something to the airline for your 102 FF miles, plus their cost of capital until you pay up, or pretty close to the $102.49 you eventually pay. (Of course they hope you won't pay on time, which is where they really make their money, but we're smart enough to know that.) Everyone's working on thin margins, but with high volumes it all adds up.

If there's no fee the business model falls apart. That's why we couldn't pay taxes with credit cards until someone came up with this third-party gimmick to get around rules about merchants not being allowed to add a fee for taking plastic. The underlying problem is that the IRS, unlike many merchants, won't absorb CC fees: if you owe it $100, it doesn't want to end up with $98. Local tax authorities can if they want to, which is why I think you can pay some local taxes by credit card. (Don't ask me which, I can't pay mine that way, but I recall reading posts to that effect here on FT.)

In a way, I'm kind of surprised that the IRS doesn't encourage credit card use. It seems like they would save on both labor and the risks inherent with paper checks, collections, etc. if they just accepted plastic directly.

I mean, in the absence of a 2x SPG deal, I put a paper check in the mail on the night of April 15th. Somebody at a big processing center has to open my mail, manually process the paperwork, get the paper check passed along to get cashed, and it finally comes out of my account sometime in late April.

If I sent 'em $100, I'd be willing to bet it costs them more than $2 to process it.

Obviously if I owe $100,000, it's a different story. The labor costs are fixed, the risk of a bad check is maybe a little higher, but the juice is now a lot higher. Still...maybe if they capped it or said only individual 1040's were eligible. I guess they just have a good thing going as is: a lot of us are, for the most part, willing to pay a third party, making things easy for The Man.