Earning miles on tax payments

I just got an email from the guy that does my taxes and it makes me wish I lived in Switzerland, because it might just be cheaper and they have better chocolate. If you find yourself owing taxes this year, take solace in the fact that you can earn some extra miles paying it.

Credit card processing fees are high at 1.87 – 2.35% but some people might find it worthwhile if it helps them meet spending requirements. Plus, paying taxes online is a much easier (albeit more expensive) option than getting a prepaid card involved. Since tax payments don’t fall into any kind of bonus category, they earn the standard payout, which can still be lucrative with the right credit card:

  • Radisson Rewards Visa Business Card – 5 points per $1
  • Radisson Rewards Premier Visa Signature Card – 5 points per $1
  • Citi Hilton Honors Reserve – 3  points per $1
  • Hilton Honors American Express – 3  points per $1
  • Amex Hilton Ascend Card – 3  points per $1
  • Hilton Aspire Card from American Express – 3  points per $1
  • Barclay Arrival Premier World Elite MasterCard – 2 points per $1
  • Fidelity Rewards Visa – 2% cash back
  • Virgin Atlantic World Elite MasterCard – 1.5 miles per $1
  • Chase United MileagePlus Club Card – 1.5 miles per $1
  • Starwood Preferred Guest Credit Card from American Express – 1.25 airline miles per $1 spent (factoring in the 5,000 point bonus per 20,000 miles transferred)
  • Starwood Preferred Guest Business Credit Card from American Express – 1.25 airline miles per $1 spent (factoring in the 5,000 point bonus per 20,000 miles transferred)

Another way to maximize your tax payment is to charge it to a credit card that earns a spending bonus in the form of extra points, elite status, or a companion pass. The great thing about focusing your spend on one of the cards listed below is that you’ll not only earn at least 1 point per $1 spent, but you’ll get closer to a reward that will hopefully improve your travel experience in the future:

Bonus Points and Free Nights

American Express Premier Rewards Gold Card:  

  • 15,000 bonus miles for spending $30,000 within one calendar year

Hawaiian Airlines World Elite MasterCard

  • 5,000 bonus miles after $10,000 in annual spend

Hawaiian Airlines Business MasterCard

  • Earn 20,000 bonus miles annually after spending $50,000 – $99,000
  • Earn 40,000 bonus miles annually after spending $100,000

United MileagePlus Explorer Card

  • 10,000 bonus miles for spending $25,000 within one calendar year

Virgin Atlantic MasterCard

  • 7,500 bonus anniversary miles when you spend $15,000 per calendar year
  • 7,500 bonus anniversary miles when you spend $25,000 per calendar year

Airline Companion Passes

British Airways Visa Signature Card

  • Earn the British Airways Travel Together Ticket after spending $30,000 within a year.

Southwest Rapid Rewards Premier Credit Card and Southwest Rapid Rewards Premier Business Card

  • Earn the Southwest Companion Pass when you earn 110,000 Rapid Rewards points. Sign-up bonuses and spending count.

Virgin Atlantic MasterCard

  • Spend $25,000 per year, get an economy class companion ticket for half the miles

Airline and Hotel Elite Status

Citi Executive AAdvantage Card

  • 10,000 EQM after spending $40,000 in a calendar year

Delta Reserve Credit Card

    • 10,000 Medallion Qualification Miles after your first card purchase
    • >15,000 MQM after $30,000 spent
    • <15,000 MQM after another $30,000 spent ($60,000 total)

Barclay AAdvantage Aviator Silver World Elite MasterCard

  • 5,000 EQM’s per $20,000 spent, maximum of 10,000 miles.

Virgin Atlantic World Elite MasterCard

  • Earn 1 tier point per $2,500 spent (up to two per month)

Hyatt Visa Signature Credit Card

  • Earn 2 stays/5 nights after spending $20,000 per calendar year
  • Earn an additional 3 stays/5 nights after spending $40,000 per calendar year

Marriott Rewards Premier Visa

  • Earn 1 elite credit for every $3,000 spent

Ritz Carlton Rewards Card

  • Get Platinum status after spending $75,000 per year

Paying Taxes With Amex Gift Cards

You can purchase an Amex gift card online, earn cash back and rewards, then use the gift card to pay your taxes. The great thing about this is that the 1.5% cash back from Top Cash Back largely off-sets the credit card processing fee. Use the Barclay Arrival Plus World Elite Mastercard to purchase your gift card and you’ll earn 2.2% in travel rewards cash, leaving you with a profit.

On a similar note, Redbird is offering a $20 bonus for depositing your tax return into your Redbird account. This won’t affect your $5,000 monthly loading limit.

Paying Taxes with a Debit Card

If you’d rather not shell out hefty fees for credit card payments but still want to earn rewards, you can opt to pay your taxes with a rewards debit card like the one issued by UFB Direct, which earns 0.5 AAdvantage miles per $1 spent. You’ll earn fewer rewards, but you will also pay a much lower processing fee of $2.49 – $3.50 per transaction as opposed to 1.87 – 2.35%.

These are just a few options for paying your tax bill this year. So put your rose colored glasses on and be happy that when the government uses your hard-earned cash to pave roads, fund research on the migration patterns of sea turtles and the education of underachieving students who don’t care, at least you’ll get a vacation out of it eventually.

6 thoughts on “Earning miles on tax payments”

  1. I don’t quite understand the Redbird section. Is this using your RED balance to make a tax payment? Doesn’t that charge like an AX credit card?

    Also, for the $20 promo, I got it by splitting my return w/my normal account. $1 was sufficient to get the bonus. Also, I believe the direct deposit monthly limit is separate from the cash load monthly limit.

  2. how do you pay california taxes with credit card? any particular website that you like that has low fees?

  3. “I just got an email from the guy that does my taxes and it makes me wish I lived in Switzerland, because it might just be cheaper and they have better chocolate.”

    True, but the Cali sunshine all year around is worth at least 5x the Swiss chocolate, not to mention the fact that you’d get Redbird nostalgic and get misty-eyed when seeing some random red & white traffic sign that’d make you think of Target 😛

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