• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 27 years!

    Join tens of thousands of other owners just like you here to get any and all Timeshare questions answered!
  • TUG is asking for recent reviews of older resorts, earn a free year membership!

    Read more here
  • TUG has now saved timeshare owners more than $18,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $18 Million dollars
  • Follow the TUG Member Banner as it travels the world on vacation with Timeshare owners! Also sign up to get the banner sent to you so you can submit a photo of your vacation with the banner to share with TUG! Banner Thread
  • Sign up to get the TUG Newsletter for free! Join tens of thousands of other owners who get this every week! Latest resort reviews and the most important topics discussed by owners during the week!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    Read more Here
  • A few of the most common links here on the forums for newbies and guests!

Anyone paid Income Taxes with Rewards Credit Card?

planada

TUG Member
Joined
Jun 8, 2005
Messages
160
Reaction score
21
Points
378
Location
Phoenix,Arizona
Resorts Owned
Marriott Kauai Beach Club, Marriott Sabal Palms,Marriott Waiohai Beach Club, Cibola Vista Resort, Pueblo Bonito Sunset Beach,Marriott Destination Points,Vidanta Nueva Vallarta Grand Lux
I think I have seen this addressed in past years, but cannot locate it at this time. Has anyone come up with a "creative" way to pay your income taxes with the Marriott Rewards Credit Card to utilize the points. I know paying the Federal government directly with a credit card involves a 2.5 %(approx?) service fee. I remember someone saying they had gone on a cruise, got casino chips with their credit card, cashed in the chips and deposited the cash in their checking account for which they wrote IRS a check. Any other suggestions? I want those 70,000 points!
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
Using your Marriott Visa card to pay taxes would be a really lousy deal. Most valuations of Marriott points come in at around one cent each, even though there are scenarios that value them considerably higher.

At one cent each, you would be paying 2.5 cents for every one cent in value that you earn.

As further proof of the poor value, you can purchase some points from Marriott for one cent each ($10 per 1,000 points), when needed for an award.

I believe the only credit card tax payment deals that make economic sense are those that offer double miles for tax payments in programs where the FF miles are valued at or more than two cents each.
 

chuck1955

TUG Member
Joined
Jun 6, 2005
Messages
181
Reaction score
5
Points
228
Location
Herndon, VA
Never use a credit card to pay taxes

Dave is correct with the exception that unless you are getting a triple reward or more it isn't worth it. This subject came up yesterday on a financial show (Ric Edelman). Typically, and I don't think Marriott Rewards is any different, you get about a penny per dollar spent back on any rewards program. The IRS requires you to use a specific service if you want to use a credit card, and that service will charge you a 2.92% "convenience fee" on top of the taxes that you pay, or almost 3 cents a dollar. Much, much cheaper just to buy the points if you need them.
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
Well, not quite.

First, I wouldn't use a site that charges 2.92%. Official Payments charges 2.49% and has been in the tax payment business for at least five or six years.

Second, the generally recognized value of frequent flyer miles on most U.S. airlines is about two cents each (see Flyer Talk discussions on this issue, for example). Thus, earning two miles per dollar spent equals a value of about four cents per dollar, more than offsetting the convenience fee cost. Accordingly, it generally takes only double (not triple, as you suggest) miles for such payment to make some sense economically.

That doubling wouldn't work for Marriott, since the value of a Marriott Rewards point - for most uses - is less than that of a typical frequent flyer mile.

There are a number of affinity credit cards that offer double miles for tax payments. Delta, United and Starwood affinity cards are the ones that I know that are currently offering double miles for tax payments.

One other consideration: You have to pay the convenience fee now. You might not use the FF miles for several years. Is it worth it to you to pay that fee now to obtain miles you might not use for a long time - or ever?
 

Hoc

TUG Lifetime Member
Joined
Jun 7, 2005
Messages
2,560
Reaction score
1
Points
523
Location
Orange County, CA
Given that the IRS considers airline miles to be income, I'm trying to figure a way to pay this year's taxes in airline miles. ;)
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
Huh?

The IRS doesn't tax the receipt of FF miles as income, except in very limited situations. In fact, the IRS issued guidance in its Announcement 2002-18, stating that it will not assert a federal tax liability for frequent flyer miles earned through business travel and used for personal purposes.

Examples of taxability: An employer purchases and awards FF miles to employees as a bonus. Another example is the income derived from selling FF miles, if one decides to do that in spite of FF program rules prohibiting such a sale.
 

pwrshift

Tug Review Crew: Rookie
TUG Member
Joined
Jun 6, 2005
Messages
5,528
Reaction score
28
Points
483
Location
Toronto
Resorts Owned
Marriott Manor Club - 3 weeks platinum, 2 weeks at Marriott Beachplace Towers, and 1 week at Marriott Canyon Villas
Sounds like Hoc might be a 'convert' to Marriott Rewards points! :)

Brian
 

planada

TUG Member
Joined
Jun 8, 2005
Messages
160
Reaction score
21
Points
378
Location
Phoenix,Arizona
Resorts Owned
Marriott Kauai Beach Club, Marriott Sabal Palms,Marriott Waiohai Beach Club, Cibola Vista Resort, Pueblo Bonito Sunset Beach,Marriott Destination Points,Vidanta Nueva Vallarta Grand Lux
You guys missed the "jest" of my question. I never had the intention of using the card to directly to pay the tax bill. I was thinking more on the lines of.............. (example) buying a postal money order, paying for that money order WITH the credit card, then depositing the money order in the bank, and writing a check for the income tax bill. This is just pie in the sky... thinking creative to maximize point earnings.
 

dougef

TUG Member
Joined
Jun 6, 2005
Messages
505
Reaction score
15
Points
378
Location
CT
Resorts Owned
Marriott's Ocean Pointe
Marriott's Grande Vista
planada said:
You guys missed the "jest" of my question. I never had the intention of using the card to directly to pay the tax bill. I was thinking more on the lines of.............. (example) buying a postal money order, paying for that money order WITH the credit card, then depositing the money order in the bank, and writing a check for the income tax bill. This is just pie in the sky... thinking creative to maximize point earnings.
You cannot buy a postal money order with a credit card - so that specific plan won't work.
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
Doug is correct. That won't work. A similar ploy that people used to do was to by U.S. (E, I, etc.) bonds with a credit card to get the miles and then cash in the bonds as soon as the penalty period was up. Doesn't work any more.

The credit card companies have figured all this out and have generally put a stop to what you suggest.
 

planada

TUG Member
Joined
Jun 8, 2005
Messages
160
Reaction score
21
Points
378
Location
Phoenix,Arizona
Resorts Owned
Marriott Kauai Beach Club, Marriott Sabal Palms,Marriott Waiohai Beach Club, Cibola Vista Resort, Pueblo Bonito Sunset Beach,Marriott Destination Points,Vidanta Nueva Vallarta Grand Lux
Thanks everyone..........That is exactly why I asked here, I knew I would get sound advice!
 
Top