topic Re: Overpaying taxes for rewards in Credit Cards

Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 20:56:08 GMT

Is there anything prevent somebody from overpaying their taxes by, oh, $20,000?

Per IRS.gov:

"If you overpaid, IRS will refund it after the return is processed, excepting offsets or debt on your account."

Edited for brevity to allow for continuance of discussion.

Re: Overpaying taxes for rewards

Imperfectfuture — Tue, 20 Jan 2015 20:48:17 GMT

What is with all the threads popping up on creative ways to spend that we are not allowed to talk about?

Re: Overpaying taxes for rewards

kdm31091 — Tue, 20 Jan 2015 20:49:31 GMT

Look if you want to milk the system and do things you are obviously not supposed to do to meet minimum spend have at it but it is not something we talk about here.

If you can't meet min. spend legitimately, anyway, the card is probably too expensive for you to justify! Considering most cards with high min. spend for bonus also have an accordingly high AF.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 20:50:49 GMT

This is not the same as buying cash equivalents.

If you legitimately have a tax debt, you are allowed to pay it by credit card. There are several companies that process these payments for the government. Credit card companies know that this is a legitimate way to pay taxes.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 20:51:24 GMT

Also I'm well versed on "what we talk about here", but I appreciate the lectures.

Re: Overpaying taxes for rewards

kdm31091 — Tue, 20 Jan 2015 20:53:40 GMT

You aren't just talking about paying with a credit card.

You are talking about overpaying purposely for the sake of rewards.

There's a difference. You know there is. Come on. We're not stupid.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 20:55:05 GMT

I genuinely don't understand why my inquiry is so upsetting to you.

I didn't say I was going to do it.

Re: Overpaying taxes for rewards

kdm31091 — Tue, 20 Jan 2015 20:56:38 GMT

I'm not upset, really. As I said, have at it, who cares. But you asking kind of implies you were planning on it, and I only got upset because you are acting as though paying with a CC and purposely overpaying for rewards are the same thing...

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 20:59:32 GMT

So you did get upset.

At least you admitted it.

And they are the same thing.

It's not like you're buying money with credit.

You're potentially overpaying a debt you owe, the difference of which is returned to you. It's like paying $100 at the grocery store for a $20 item and getting change.

Re: Overpaying taxes for rewards

kdm31091 — Tue, 20 Jan 2015 21:03:20 GMT

However you want to justify it - go ahead - as I said, one can do whatever they want. If it seems like a good idea to you, then go for it. Your original question was is there anything to stop someone from doing it, and I believe the answer is no, it would be something you could do.

Would I personally do it? No, because to me, it's wrong to purposely overpay for the sake of rewards. Paying $100 at the store and getting change is not purposely overpaying to get something out of it.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 21:06:39 GMT

I really have no intention of doing this.

I do have to pay taxes this year, and it just crossed my mind as I was processing the payment.

Re: Overpaying taxes for rewards

Anonymous — Tue, 20 Jan 2015 21:59:26 GMT

I dont see any problem with it. But unless you are getting more than 3cpp its not worth it due to fees. But I would absolutely do this to meet spend if I had to (We spend enough legitimately as it is, lol)

Re: Overpaying taxes for rewards

red259 — Tue, 20 Jan 2015 22:09:38 GMT

@Involver wrote:
Is there anything prevent somebody from overpaying their taxes by, oh, $20,000?

Per IRS.gov:

"If you overpaid, IRS will refund it after the return is processed, excepting offsets or debt on your account."

Edited for brevity to allow for continuance of discussion.

Bad value. Bad idea. Just bad. First off, you will get hit with a fee to pay your taxes with a credit card, so your profit margins will be slim and in some cases the fee will eat up the rewards. Second, you are giving the government money and then waiting for a refund. What if the government decides they don't agree you are entitled to your full refund? I pay taxes with my credit card for convenience and I have to be very careful which card I use, because some cards will result in a loss. Can it be worth it to meet initial spend? Sure if you need to make the spend anyway. Beyond that then no and clearly overpaying is a losing proposition

Re: Overpaying taxes for rewards

Anonymous — Tue, 20 Jan 2015 22:16:11 GMT

The government isn't very speedy in returning overpaid money. Think months and months

Re: Overpaying taxes for rewards

CreditCuriosity — Tue, 20 Jan 2015 22:17:53 GMT

Oh when I file this year I will be paying approx 1k I will owe the gov't by CC to meet spend.. So 3% or $30 is wel worth it for me, also rewards is 1% back so make that $20... I am not overpaying them, it is completly legit imo as you are paying a fee.. Overpaying I don't see being benefical as the 3% fee on paying taxes.. My case to meet min spend of what i TRUELY owe, I see no ethical issue with it all all.. What I do see an ethical issue with is I will never see my SS from the gov't when I retire.. So ya they have stoen several hundred thousand from me in the biggest pyrmaid scheme in the history of the world... Is that ethical? Granted we are talking taxes and cc companies here.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 22:18:10 GMT

The way I look at it.

If you're trying to meet, say, $3k initial spend, and you don't have heavy regular spend every month.

You pay $56.10 for the convenience of getting it over with.

You can pay with a 2% card and make 0.13% on paying your taxes. It's not a lot of money, but it's free money on top of something you'd be doing anyways.

Re: Overpaying taxes for rewards

Anonymous — Tue, 20 Jan 2015 22:19:15 GMT

If it has to do with rewards its "unethical"

Re: Overpaying taxes for rewards

red259 — Tue, 20 Jan 2015 22:23:46 GMT

@Involver wrote:
The way I look at it.

If you're trying to meet, say, $3k initial spend, and you don't have heavy regular spend every month.

You pay $56.10 for the convenience of getting it over with.

You can pay with a 2% card and make 0.13% on paying your taxes. It's not a lot of money, but it's free money on top of something you'd be doing anyways.

That is a slim margin and it is true you would make that minimal profit. What you should also consider is that you are spending extra money in the meantime (in the way of fees) that you will not recoup until you redeem your rewards, which could be much later down the road. I would only recommend paying taxes this way if its for convenience sake or if there is just no other way to make the initial spend. Otherwise I think you will earn more reward value from meeting initial spend via other means.

Re: Overpaying taxes for rewards

Involver — Tue, 20 Jan 2015 22:25:40 GMT

I'm really not planning on doing this.

I thought it was an interesting topic for discussion.

Re: Overpaying taxes for rewards

Anonymous — Tue, 20 Jan 2015 22:31:14 GMT

Same, I wouldn't overpay for the sake of a very minimal earrings potential. But I would pay my taxes by CC to meet spend.