2020: Is It Worth Paying Your Taxes On A Credit Card To Earn Miles? A Breakdown By Card Benefits And Value

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Read this first: The Ultimate Guide To Credit Cards And Points: Where To Start And What You Need To Know About The Best Cards For You!


On the IRS website you can find a processor that charges 1.87% to process your tax payment via credit card. You can make estimated payments at any time.

You can make 2 payments per credit card processor for each quarterly estimate and for your year end bill. You can make another 2 payments each time by using a spouse’s information to pay, though you may want to call the IRS to confirm that they link that payment.

The tax payment fee may be tax-deductible, you should speak to a tax professional about that. If you can deduct the fee on your personal or business taxes that will change the math below based on your marginal tax rate.

You can also request a refund for any overpayment and the IRS will cut cut you a check or a direct deposit into your checking account.

It can definitely make sense to pay your taxes via credit card if you are signing up for a card and are trying to reach a spend threshold to earn a signup bonus that you won’t be able to reach without some help.

Big welcome bonuses are currently available on cards like:


Even if you don’t have a new card, it can still make sense to pay your taxes with a credit card for the rewards and the extra time to pay.

In order to determine if it’s worth earning miles at a 1.87% rate, you’ll need to assign a value to each currency. Values are highly subjective and will vary based on what you use the miles for, but in the cases below I’ll use my own personal valuation. YVMV (Your valuation may vary!)

  • The Blue Business℠ Plus Credit Card from American Express offers 2 points per dollar spent everywhere. No annual fee.
    • A $10,000 tax payment will cost $187, but you will earn 20,374 points. If you value your AMEX points at 1.5 cents each, that a value of $305.61 worth of points. You can transfer those points into miles with airlines like Avianca, British Airways, Delta, El Al, Singapore, Virgin Atlantic, and more.
    • Note that you only earn 2 points per dollar on $50,000 of annual spending, though if you have multiple primary cards they would get 2 points per dollar on $50,000 of annual spending on each card.

  • The Chase Ink Business Unlimited Card earns 1.5 Chase Ultimate Rewards points per dollar spent everywhere. If you open this card now you would also earn $500 in the form of 50K points for spending $3,000 in 3 months. The Chase Freedom Unlimited card also offers 1.5 points per dollar spent. Both cards have no annual fee.
    • A $10,000 tax payment will cost $187, but you will earn 15,281 points. If you value your Chase points at 1.8 cents each, that a value of $275.06 worth of points. If you or someone in your household has a Sapphire ReserveSapphire Preferred, or Ink Preferred card then you can transfer points from Freedom to one of those cards and from there to airlines like United and hotel programs like Hyatt. As United miles or Hyatt points it’s not hard to get a value of 1.8 cents of more per point when you travel. Alternatively if you have a Sapphire Reserve you can also redeem those points for 1.5 cents each towards travel, while having the Sapphire Preferred or Ink Preferred card would also you to redeem those points for 1.25 cents each towards travel.

  • The Business Platinum® Card from American Express offers 1.5 points per dollar spent everywhere on transactions that are $5,000 or more.
    • A $10,000 tax payment will cost $187, but you will earn 15,281 points. If you value your AMEX points at 1.5 cents each, that a value of $229.22 worth of points. You can transfer those points into miles with airlines like Avianca, British Airways, Delta, El Al, Singapore, Virgin Atlantic, and more.
    • You can earn 1.5 points per dollar on $2,000,000 of annual spending.
    • Having this card allows you to get 35% of your AMEX points rebated on all business/first paid airfare and on coach airfare with the airline of your choice, up to 500,000 bonus points per calendar year.


  • The Citi Double Cash card earns 2% cash back, so you’ll come out .13% ahead of the 1.87% tax processing fee. Even if you don’t want to deal with the miles aspect of this, the 2% cash back makes it a no brainer to use.


Other cards offer benefits for hitting spend thresholds, which tax payments can help with:


  • The Marriott Bonvoy Brilliant Consumer AMEX (and the discontinued Ritz-Carlton card) offer Platinum status for spending $75K in a calendar year. You’ll need to determine how to value having Platinum status to see if its worth putting tax payments on this card.

  • The Chase World Of Hyatt Credit Card offers a 2nd annual anniversary night if you spend $15K in a cardmembership year.
  • This card also offers 5 elite qualifying night credits every year and you’ll earn an additional 2 night credits towards elite status with every $5,000 that you spend.

Here is what you can earn with Hyatt elite status nights:

  • Free anniversary night at category 1-4 hotels without any spending required.
  • Spend $15,000 on the card and you’ll get a 2nd free anniversary night at category 1-4 hotels.
  • Earn 20 night credits (With $40,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) and you’ll get 2 club lounge awards that are valid for club access for the duration of your Hyatt stay.
  • Earn 30 night credits (With $65,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) and you’ll get Explorist status, 2 more club lounge awards, and another free night at category 1-4 hotels.
  • Earn 40 night credits (With $90,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) and you’ll get a $100 Hyatt gift card or 5,000 bonus points.
  • Earn 50 night credits (With $115,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) and you’ll get 2 confirmed suite upgrades that are each valid on paid or award stays of up to 7 nights.
  • Earn 60 night credits (With $140,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) and you’ll get Globalist status, 2 more confirmed suite upgrades on paid or award stays, and a free night at category 1-7 hotels.
  • For every additional 10 night credits (With $25,000 of card spending or less with a combination of award or paid nights at Hyatt hotels and spending) you’ll get another confirmed suite upgrade or 10,000 Hyatt points.

Hyatt also awards a free category 1-4 hotel night after staying in 5 of their hotel brands (on paid or award stays) and a free category 1-7 hotel night after staying in 10 of their hotel brands.

I value Hyatt points at about 1.5 cents each, so depending on how many additional free nights and elite status benefits you can rack up and how you value those free nights and benefits, it can make sense to put tax payments on this card.


  • The Chase British Airways Card offers a free companion pass for spending $30K/year. If you open a new card you can also earn 50K bonus Avios for spending $3,000 in 3 months and another 50K bonus Avios for spending another $17,000 in your first year. The free companion pass is valid on BA award tickets worldwide, though fuel surcharges will apply.
    • I value BA Avios at about 1 cent each. You’ll need to determine how to value the companion pass to see if its worth putting tax payments on this card.

  • The JetBlue Plus World Elite Mastercard offers Mosaic status for spending $50K annually.
    • JetBlue points are a fixed value currency, so there are no aspirational aspects to this program as points will typically be worth between 1.1-1.5 cents each. You’ll need to determine how to value having Mosaic status to see if its worth putting tax payments on this card. Unfortunately, the value of Mosaic status took a big hit with the introduction of basic economy fares.

  • The Delta Platinum Consumer and Delta Platinum Business cards offers elite qualifying miles for meeting annual spend thresholds. If you spend $25K/year you’ll also waive the requirement to spend a minimum amount on Delta flights in addition to flown miles to earn elite status. 
  • The Delta Reserve Consumer and Delta Reserve Business cards offers elite qualifying miles for meeting annual spend thresholds. If you spend $25K/year you’ll also waive the requirement to spend a minimum amount on Delta flights to earn elite status. 
    • I value Delta miles at about 1 cent each. You’ll need to determine how to value earning qualifying miles and the flight spending requirement waiver to see if its worth putting tax payments on this card.

  • The AMEX Hilton Honors Surpass card offers a free annual night for spending $15K/year and Diamond status for spending $40K/year.
  • The AMEX Hilton Honors Aspire card offers a 2nd free annual night for spending $60K/year.
  • The AMEX Hilton Honors Business card offers a free annual night for spending $15K/year, another annual night for spending another $45K/year, and Diamond status for spending $40K/year.
    • I value Hilton points at about 0.5 cents each. You’ll need to determine how you value the free night and status benefits to determine if it’s worth putting tax payments on this card.

  • The Chase IHG card offers 10K bonus points for spending $20K in a cardmembership year.
    • I value IHG points at about 0.5 cents each, so it’s probably not worth putting tax payments on this card.

  • The Chase Southwest Business card gives companion pass status with unlimited free uses until the end of the next calendar year if you earn 125K points in a year across all Southwest cards.
  • The Chase Southwest Performance Business Credit Card gives companion pass status with unlimited free uses until the end of the next calendar year if you earn 125K points in a year across all Southwest cards. This card also offers 1.5K tier points towards A-List status for every $10K spent, up to $100K annually.
  • The Chase Southwest Priority card gives companion pass status with unlimited free uses until the end of the next calendar year if you earn 125K points in a year across all Southwest cards. This card also offers 1.5K tier points towards A-List status for every $10K spent, up to $100K annually.
  • The Chase Southwest Plus card gives companion pass status with unlimited free uses until the end of the next calendar year if you earn 125K points in a year across all Southwest cards.
  • The Chase Southwest Premier card gives companion pass status with unlimited free uses until the end of the next calendar year if you earn 125K points in a year across all Southwest cards.
    • Southwest points are a fixed value currency, so there are no aspirational aspects to this program as points will typically be worth between 1.3-1.7 cents each. You’ll need to determine how to value having Companion Pass and A-List status to see if its worth putting tax payments on this card.
    • Read more about the Southwest cards here.

  • The Citi AA Business Platinum card offers a free domestic companion certificate for spending $30K/year.
  • The Citi AA Executive card awards 10K elite qualifying miles for spending $40K/year.
  • I value AA miles at about 1.3 cents each. You’ll need to determine how to value earning qualifying miles to see if its worth putting tax payments on this card.

Is it worth it? It all depends on what you do with your miles. This isn’t the cheapest way to earn miles, but it’s painless. The ability to overpay your taxes to reach a threshold is also helpful.

The value of airline miles is huge if you fly last-minute, one-way, or in business or first class internationally.

  • If I need a last minute flight from Cleveland (or Chicago, Detroit, Miami, Montreal, Orlando, Pittsburgh, Toronto, etc) to NYC that can cost $500 each way, I can instantly transfer 6.5K points to Avianca Lifemiles for travel on United or 7.5K points to British Airways to book a short-haul on American with no last minute booking fees. That’s a value of up to 7 cents per point.
  • 76K points transferred to Singapore is enough for a ticket in a private couples suite on an A380 one-way from JFK to Frankfurt with no fuel surcharges.
  • If I want to fly in a $25,000 ANA First Class Suite round-trip from the US to Tokyo, I can instantly transfer 110K or 120K points to Virgin Atlantic. That’s a value of up to 23 cents per point.
  • If I want to stay in a 5 star Park Hyatt in the Maldives, Melbourne, NYC, ParisSydney, or Tokyo that would cost over $1,000/night, I can instantly transfer 25-30K points to Hyatt to do that, a value of up to 6 cents per point.
  • 120K Marriott points transfer into 50K Alaska miles, enough for a round-trip flight between JFK and Vancouver in Cathay Pacific business class or a one-way business class flight on Cathay Pacific from JFK to Hong Kong. With 62.5K Alaska miles you can even fly in business class from JFK to Tel Aviv or Johannesburg with a free stopover in Hong Kong for as long as you want.

Which card do you use to you pay your taxes? Or is it too pricey of a method to get miles? Sound off in the comments!

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29 Comments On "2020: Is It Worth Paying Your Taxes On A Credit Card To Earn Miles? A Breakdown By Card Benefits And Value"

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Yo

Is this instead of the Sunday weekly roundup?:(

JS

Re: the Amex blue biz you write “Note that you only earn 2 points per dollar on $50,000 of annual spending, though if you have multiple primary cards they would get 2 points per dollar on $50,000 of annual spending on each card“

What does this mean? Each authorized user gets their own 50k x 2 ? What is a “primary card” ?

iahphx

1.87% is a pretty rough fee to pay in most circumstances. I guess if you have no access to manufactured spending and have a minimum spend to meet (or you’re so busy you can’t do this) it could make sense. I have paid the fee on a 2% Membership Rewards AMEX Blue business card to then transfer to Avios with a 40% bonus, but even that seemed somewhat “expensive.” A better way is to look for local and state government bills that are sometimes payable without credit card fees. I’ve even paid property taxes this way.

KDICPA

“I have paid the fee on a 2% Membership Rewards AMEX Blue business card to then transfer to Avios” what 2% fee are you referring to?

JohnB

If the taxes you pay, help you meet a spend requirement, then this is the easy way to meet those requirements. Far easier to do this from your home, than running all over the place to manufacture spend.

Stephen

Is there a limit on how much you can overpay? Is there a red flag by paying certain % of your actual taxes?

yy

I would doubt it. The government is happy to have the float, I surmise.

Sam

For all the guys here who voted for Trump the credit card fees are no longer deductible when paying personal taxes as per the trump tax laws in IRS publication 529. (And there’s no law that allows you to deduct personal interest or fees under your business).

#LeavePoliticsOut

For all the guys who voted for Hillary, are the fees still deductible?

Chuchum Ainer

Oh good, I didn’t vote trump so mine are still deductible.

E

Great, so since I voted for another candidate I’ll just tell the IRS to exclude me from Trump’s laws.

EE

Fee NOT tax deductible

Hannah

I read on the IRS website that you can only make two payments per quarter. I often use more than two credit cards to make payments.

Rishonim

Is a 1040 IRS tax payment by cc treated as a cash advance or a regular cc chg +1.87% fee?

Doug

It’s a regular credit card charge/purchase…I’ve done this with credit cards from all of the major banks and NONE treated it as an advance.

EE

Ok
Which card should I open ?
Don’t like Amex
Have csr and ink and freedom and ua Sw
Had b a – not such amazing points for Israel
What’s a great idea ?

Hannah

https://www.irs.gov/payments/frequency-limit-table-by-type-of-tax-payment
I know that each processor only allows you two payments per quarter
according to the IRS website, you are limited to two payments per quarter for 1040-ES

Ba

Ba was good when there was air Berlin and us air
Now for domestic I don’t need 200k ba miles
Companion tax too hi
Better direct flights
So ba card on the decline

Random q

Sorry for the random question
If I get an American Airlines cc do I get free bags even if I don’t book the flight with that card?

wpDiscuz