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04-01-2017, 10:15 AM #1
Paying Income Taxes with Credit Card if you are self employed?
Has anyone considered paying Federal income tax with a credit card if you are self employed?
There is a surcharge for doing this but I think the value of the points for redeeming for travel is at or above the surcharge.
Here is a brief calculation.
Say you have an Amex Business Platinum Card.
Generally points are worth 1.8 cents per point based on valuations from various online blog sites. I have personally gotten at least 3-4 cents in value for Amex points transfering them to airlines to redeem for business or first class tickets for vacation.
If you use Pay1040.com the fee to pay with credit card is 1.87% which is almost break even.
NOW*** Keep in mind if your tax bill is over $5000 dollars the Platinum gives you 1.5 Times the points so if your tax bill is $5000. You would earn $7500 Amex Member rewards points. These would be worth at least
7500 X .018 = $135 dollars
Cost of paying $5000 in taxes through Pay1040.com = $93.50
This is effectively buying amex points for .012 cents per dollar which is a price point that is absolutely below market especially since with the new Amex Platinum card you can redeem all points at 2 cents per dollar.
That is what I think the best example is but others may use Miles cards for Delta, American, or United, or Chase Saphire, or Starwood Preferred Guest.
04-09-2017, 10:19 AM #2
Interesting. I get a refund so this doesn't apply to me but never really took into account the value of points being worth more than a fee when purchasing.