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How using an Amex Biz Plat to pay taxes is “profitable”
I was looking at the economics of using Plastiq to pay taxes with my American Express Business Platinum card. Right now Plastiq is offering a 2% processing charge. American Express announced last fall that they would be refunding 50% of the point redemptions through Amex travel if you maintain an Amex Biz Plat, effectively valuing every Membership Reward point at $0.02.(You must redeem on your specified airline or book a premium ticket). So for every dollar you’re spending in fees you’re earning back a commensurately valued Membership Reward point when redeemed through Amex travel for qualified fares. Amex also announced that every qualified purchase over $5k would earn a 50% bonus. If your tax bill was over $5000 and you used Plastiq ( which qualifies for the 50% bonus) you’d actually be net ahead 1/2 point on every dollar paid. Let me show you how using Plastiq + Amex Biz Plat to pay taxes is “profitable.”
I say “profitable” because the net gain is trapped in membership rewards. This isn’t a liquidating strategy, but rather a way to create value off of your tax bill.
Plastiq has a promotion going until 2/28/17 for a reduced processing fee of 2% when using Amex
Let’s take a look at two examples.
The first example is if you have an Amex Biz Plat already:
- Tax Bill: $20,000
- Plastiq fee: $400 ( $20,000 *0.02)
- Membership Rewards earned: 30,000 ( 20,000 on spend + 50% bonus of 10,000)
- Value of 30,000 MR = $600
- Net gain = $200
The second example is if you don’t have an Amex Biz Plat
You sign up with the current offer:
- Tax Bill: $20,000
- Plastiq fee: $400 ( $20,000 *0.02)
- Membership Rewards earned: 105,000
- 50,000 from the first $10k spent
- 25,000 from the 2nd $10k spent
- 20,000 from the tax bill
- 10,000 from 50% bonus
- Value of 105,000 = $2100
- Net Gain = $1700
*the 50% bonus is capped at 1,000,000 points.
The worst case scenario you are pre-paying for discounted fare market valued flights purchased through Amex Travel. Best case, you redeem the points by transferring them to partners for premium flights that equate to a far higher valuation than $0.02. This is how I flew on a $10k Lufthansa First Class flight, road across the tarmac in a Porsche, and took a nap in a private bedroom before my flight. I transferred Amex to Singapore to fly Lufthansa.
Additionally, retention bonuses are largely assessed from spend. The more spend you put on a card, the higher the odds of a better retention bonus. It’s not unheard of for Personal Amex Platinum retention offers to be 50k points. I know a few people who have received that offer who have put 5 to 6k per month on the card for a couple years. Obviously this is a Business so it is a different paradigm, but the premise is the same: more spend, higher potential retention bonus.
I used taxes as an example, but Plastiq can be used for car payments, rent, mortgages, etc. Any of those situations provides the potential for a net gain.
A couple thoughts of caution
- Amex Biz Plat is a charge card, meaning you have to pay the bill in full
- if you don’t have the means to pay your business tax bill do not think of this as a way to finance it. It’s a terrible idea in that situation. I’m not an financial advisor, etc but am just to make it clear – this is only an alternative to writing a check
- This is profitable for those who travel a lot. This isn’t a cash out opportunity, but rather a way to earn valuable Membership Rewards to be transferred or redeemed for a value greater than the processing fee.
- The bonus points take a little while to populate the account, so know that going into the transaction. If you’re counting on them for a redemption, you may be in a holding pattern until the credit.
Other resources to pay your taxes: From irs.gov
Pay1040.com has the lowest fee at 1.87% – I’m assuming this would qualify to earn the 50% bonus on payments larger than $5k.
Less than 50k American Express Membership Rewards will put you in Singapore Business
Less than 30k will put you in EVA Royal Laurel
55,000 transferred to Aeroplan will put you in Ethiopian
Or Virgin Upper for 70k transferred to Delta:
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Chase Sapphire Preferred® Card
Welcome Offer
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
Annual Fee
$95
Points Earned
Transferrable Chase Ultimate Rewards
- 5x on all travel purchased through Chase Travel℠
- 3x on dining, including eligible delivery services for takeout & dining out
- 3x on select streaming services
- 3x on online grocery purchases
- (excluding Target, Walmart and wholesale clubs)
- $50 Annual Chase Travel Hotel Credit via Chase Travel℠
- The begins immediately for new cardmembers and after your account anniversary for existing cardmembers
- 2x on all other travel
- 10% Anniversary Bonus
- Every year you keep the card, your total spend will yield a 10% points bonus. If you spend $10k in a year, you’ll get 1k bonus points
- Chase Sapphire Preferred continues to redeem at 1.25c in the Chase Travel℠ and the slew of other benefits remain in tact including Auto Rental Collision Damage Waiver ( primary ), purchase protections, etc.
- Points are transferrable to 14 Ultimate Rewards partners
- Redeem in Chase Travel℠ for 1.25 cents per point
- No foreign transaction fees
- Suite of Travel and Purchase Coverage
- Auto Rental Collision Damage Waiver is my favorite
- Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2027.
- $95 Annual Fee
We keep an up to date spreadsheet that lists the best ever offers: You can find that spreadsheet here.
Historically 80k is a very, very good offer and hit in both 2022 and 2023. In 2021, we saw the offer hit an all time high of 100k. Who knows if that will ever come back.
Main Cast:
Cards that earn flexible points and should be used on the bulk of your purchases.
Supporting Cast:
Cards that earn fixed points in the currency of the airline/hotel and can not be transferred at attractive rates. These cards yield benefits that make it worth keeping, but not necessarily worth putting a lot of your everyday spend on.
The Chase Sapphire Preferred® is exceptional starter card and offers transferrable Ultimate Rewards, and pairs well with other Chase cards.
If you carry this card alongside Chase’s cashback cards like the Chase Freedom Flex® and Chase Freedom Unlimited® or the business versions: Ink Business Cash® , Ink Business Unlimited® you can combine the points into Preferred account and transfer into hotel and airline partners
Annual fee is quite low at $95 a year + you get a 10% anniversary bonus on points + $50 hotel credit in Chase travel.
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