Paying property taxes with a credit card?

[Denise L]

Is it worth it to pay property taxes with a credit card for the double UA miles? It will cost me a $112 tranaction fee for 9000 miles.

 

[Icarus]

You'll be paying about 1.2 cents per mile. If that's more value than the cost, then go for it. If you're asking is it worth 1.2 cents per mile? Some people would say yes, some would say no. It depends on how you use your miles.

I would do it.

-David

 

[johnmfaeth]

I agree with Icarus only if you pay the bill in full during the first statement period and you do not use a credit card which balance averages over two statements (the latest ripoff tactic of the credit card industry).

Also depends on the travel market you live in and go to. Here in the NY region, if I were going to Florida, miles are worth about $5 per 1,000 due to the great competition and many flights.

If you need to fly from Duluth (no offense!) to St. Maarten each year, the miles are worth MUCH more per 1,000, sometimes as much as $20+ per 1,000.

PS. Talk with your tax preparer to see whether the fee charged to pay by credit card is a tax deduction since it's not really a finance charge (not deductable) but a fee specific to making the tax payment. That would really sweeten the deal as real estate taxes paid are a deduction (if you itemize).

 

[Dave M]

Talk with your tax preparer to see whether the fee charged to pay by credit card is a tax deduction since it's not really a finance charge (not deductable) but a fee specific to making the tax payment.

No deduction is allowed.

The fee isn't a tax and doesn't fit into one of the allowed categories of allowed "miscellaneous dedctions", which generally relate certain losses (e.g., casualty losses) or to expenditures incurred in connection with earning income (such as certain education expenses and investment advisory fees), protect investment property (such as a safe deposit box rental) or calculate a tax (such as tax preparation fees or software).

The IRS issued guidance on these fees several years ago.

 

[Dave M]

The IRS issued guidance on these fees several years ago.

From this IRS article discussing convenience fees for the payment of taxes with a credit card:

The fee is a non-deductible personal expense....

The fee would be a deductible business expense if the property is business property.

 

[Denise L]

Thanks for the replies!

I posted last night and then today I couldn't remember where the offer was ! I'm pretty sure I saw one for this year's taxes, but all the links I find online are for 2005. Am I really a year behind?! Anyhow, I know I got a double miles marketing blurb the other day, but maybe it was the other year ?! Having kids has turned my brain to mush. If anyone can confirm that this Mileage Plus offer is available this year, let me know.

I would definitely pay off the card when it is due, before finance charges are incurred. We typically use (try to use) our UA miles for Hawaii flights. I stopped trying to earn them this year since we were trying to earn Hawaiian Airlines miles, but I'm not keen on the 9am flight & stopping in HNL, so I'm thinking of switching back to United.

Thanks for your help!

 

[Icarus]

If you're using the miles for coach tickets to Hawaii, A UA Hawaii saver award is 35k miles. At your cost of around 1.2 cents per mile, the comparative cost of your ticket would have to exceed $420 for it to be worth it using miles at that cost.

-David

 

[Dave M]

Denise -

Yes, the double-miles for taxes offer is still available.

Here are two links to the offer:
Official Payments Corp, where you'll be paying your taxes.

The official offer from Mileage Plus Visa. See "Footnote, Terms and Conditions" for confirmation that the offer is valid through December 31, 2006.

 

[Denise L]

Hi Dave,

Great, thanks for the link. Now my problem is, my SPG Amex is also offering double points (first I've heard). So do I get 9000 SPG points or 9000 Mileage Plus miles? I guess it depends on how hard it will be for me to book my SFO-OGG flights using FF miles. Sigh! I haven't had to try in two years.

Icarus, we often see our Hawaii flights at $700-800 per person, so paying the service fee for charging our taxes saves us some money.

Thanks again!

 

[Icarus]

It means double SPG points. SPG points don't transfer at a good ratio to UA Mileage Plus miles. But they do transfer well to most other airlines, and you get an additional 5k mile bonus for transferring 20k SPG points to 25k miles on most other airlines. You can transfer them to a Star Alliance partner airline like US Air and claim a Star Alliance award for travel on UA using those miles.

If you want UA miles, use the UA/Chase Visa.

-David