Rookie Wednesday: Paying (or overpaying) Taxes is a Simple way to Cover Minimum Credit Card Spend Goals!

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our advertising policy, visit visit this page.

Best Credit Cards

RenesPoints Rookie

Welcome to a regular feature on the Renés Points blog. This blog series covers in a “rookie” way either a Delta or travel related theme and attempts to break down to a basic level each topic. You can read up on all the previous posts HERE. Now on to this featured topic.

Fun while it lasted!

This year has been one of the strangest times ever in earning and burning card points. Most of the mega lucrative ways have gone underground like the now very dead 2% portal bonus  on Visa Debit Gift Cards (VDGC) payout (vs the normal 1%) on certain styles of cards. At the same time, other advanced techniques are step by step posted on blogs that will likely end in the death of some of these deals. In addition to these we have the good old “go to” Simon Mall (SM) VDGC deal. SM used to cap you at $10,000 a day per person but now have bumped that up to $25,000 per day and even have a field on the form you must fill out for large buys that states the reason you are buying the cards is manufactured spending (MS) – WoW!

But there is one little problem with this. The biggest one is that Amex RAT teams (reward abuse teams) really hate those who MS. Not only that, many data points are showing that purchases from SM of VDGCs are no longer counting toward both new card spend bonus number as well as Delta Amex Card(s) yearly spend goals for bonus Delta points and MQMs as well as the 25k MQD waiver spend. I personally have not made a SM VDGC purchase for a very long time now because there are so many other ways to MS that result in, not just free points, but cash back AND free points. 🙂

I hate this day each year – you?

But you know simple is nice sometimes. While many visits to Wally World can result in free points and cash back, my TIME is not free. This very reason is why so many do not mess around with MS i.e. the time and effort it takes. Thus this time of year is a great way to knock out spend for very little cost and very little time (disclaimer: I am not giving tax advice nor am I a CPA – see your own tax advisor before you use any of these ideas)!

My Q1 tax payment and fee.

Let’s say you hold the Delta Amex Platinum or Reserve card(s) and are wanting to spend $25,000 or $30,000 (once or twice) to harvest bonus SkyMiles and MQMs.

Pay1040.com is cheap and simple!

The IRS lets you pay many types of taxes for a small credit card processing fee. One of the cheapest year after year is the one you see above, that is, Pay1040.com at just 1.87% fee. That could mean the following:

  • You pay $30,000 in taxes and it costs you on your Delta Reserve card $561 in fees
  • You get a total of 45,000 SkyMiles (with the 15,000 miles bonus) worth at least $450
  • Your net result is your cost is just $111 (if you value a SkyMile at 1 cent each!)

Thus you get your MQMs for a really cheap net cost with time really not a factor since it only takes a few clicks from your computer. This is why I add this into my mix because, even with the cost included in the transaction, it is so fast and simple. I will cover most of my 60k Delta Amex Reserve card spend using this one point alone.

Another way folks also use the above is to reach large new card spend goals since paying taxes (and the fee) is AOK across just about all travel cards. I know of many readers who plan new rounds of cards many times a year to match up with each quarterly est. tax payment date i.e. not just April 15th.

What do you think? Have you used this technique to help reach your Delta Amex spend goals or to help get bonus points from some new travel card? – René

 

 

 

 

☟ ☟ Amazing 2019 offers ☟ ☟

Best Credit Cards

14 comments

  1. MS smacks of money laundering to me. These credit card loyalty programs weren’t designed for it. Maybe it’s because of MS that the Amex waiver is now saying high, because people were hitting the targets for bonus MQM artificially, ruining it for those of us that reacted the limits through real spending.

  2. I’ve been contemplating this for the past few days. I have a $50k tax bill and was going to use my Delta Plat card to quickly jump a medallion tier, but also thinking I’m mildly insane. The math isn’t terrible, but wondering how much I care about Delta status these days. 50k*1.87=$935 – (70k miles*1 cent) = $235. Mehhh….

  3. Ever since you first posted about this I always apply for a new card at tax time, and have always used pay1040. Thanks!

  4. @Reed – Sorry I did not include in post. The Delta Reserve card includes 15k bonus SkyMiles and MQMs for 30k and again 60k spend.

  5. dont forget annual fee for cards 450$ a year
    You do get club access and a free compaanion though

  6. @opposite Just playing Devil’s advocate here: another idea might be to pay, say, $25k on your Delta Plat and then the balance on something like a non-branded Amex Platinum or Gold and/or one of the Chase Sapphire card. This way, you earn the spend waiver (if you haven’t yet already), maybe get at a Medallion tier boost depending on how many MQM you already have — and then earn MRs or URs, which are more flexible and worth more.

  7. For several years I did the $25k spend to get MQM’s and MQD waiver toward status. With the bonus you’re earning 1.4x (or 1.5x with $30k on the Reserve) on spend, which I figured was OK. But with Delta making it harder and harder to redeem at better than 1c, I just don’t want to accumulate more Delta miles. Instead I’ve stopped “trying” to use Delta and gone free agent, choosing the best flight.

  8. Paying a tax bill tonight on DL Reserve, I’ll have one more 15k MQM bump after this one on Reserve and then it goes in a drawer.
    I learned a lesson last year after the nonsense necessary to capture the bonus for $90,000 spend.
    With better options out there there is no reason to spend a dime over $60,000 on Reserve.
    I’ll get my Plat Medallion status without wasting spend on Reserve again.

  9. Word of caution: paid a big tax bill last year with my SPG Amex to get enough points for a redemption that made sense. Couple days later my credit score tanked. I paid the balance immediately but it took over 3 months for my score to get back to what it was. Lesson learned and I won’t make this mistake again this year.

  10. @Santastico – That can depend on how much available credit you have total across all cards. Either way it will bounce back up as you point out over a few months.

Leave a Reply

Your email address will not be published. Required fields are marked *