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How using an Amex Biz Plat to pay taxes is “profitable”

amex biz plat american express business platinum

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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

Screen Shot 2017-02-01 at 11.03.17 AM

 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:

Screen Shot 2017-02-07 at 1.49.54 PM

  • 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.

Screen Shot 2017-02-07 at 2.54.24 PM

Less than 50k American Express Membership Rewards will put you in Singapore Business

Singapore Airlines Business Class A350-900 MAN-IAH - 3 of 62

Less than 30k will put you in EVA Royal Laurel

EVA Royal Laurel Business Class 777-300ER TPE-SGN - 20 of 94

55,000 transferred to Aeroplan will put you in Ethiopian

Ethiopian Airlines Business Class Cloud Nine LAX-DUB - 5 of 24

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.

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7 Comments

  • James February 7, 2017

    So why would someone use plastiq when pay1040 is cheaper?

    • Miles February 7, 2017

      James – good question. Plastiq can be used in more applications than taxes. Also…(and maybe readers could share their experience) I assume 1040 earns the 50% bonus, but I don’t have experience with it, and didn’t want to use it as the primary example. Plastiq does earn the 50% and also earns a small business bonus whenever Amex runs the promotion. The strategy for taxes can be applied for rent, mortgages, tuition, etc

  • Jeremy February 7, 2017

    I am taking advantages of the lowers fees as well. I see more value in using this service to meet my minimum spend for certain status compared to losing some cash in fees. Really depends on what is more important to you.

    If anyone wants to try Plastiq, I would appreciate it if you used my referral link. If you make your first payment of $20 or more, you get 200 fee free dollars. I will get 400 fee free dollars. Thanks.

    Use my referral code – 509922 – and you can send $200 of payments for free. Download the app here: https://appsto.re/us/YGXgbb.i

  • Rob February 7, 2017

    Here’s option 3 – If you recently applied for the Blue for Business AMEX, pay with that card and you’ll receive 46,000 MR (2x bonus non-category spend + 30% annual point bonus) which values at $920. Net gain of $520.

    • Miles February 7, 2017

      Great Point Rob – Worth remembering that Blue for Biz points aren’t transferrable and only worth $0.01. So you’d need to hold an Amex Biz Plat for the points to be worth $0.02 and be transferrable, but a great option.

    • jimmy February 7, 2017

      Most bloggers didn’t specific how to get 30% annual point bonus for “Blue for Business”…you have to charge 50K on the card to get that bonus.

      • Miles February 7, 2017

        Jimmy – I’m not sure where that information is coming from…the 30% is calculated off the amount of spend run through the card, not the points accumulated, and by my understanding, regardless of total spend. Per Amex: ( Blue for Business Annual Bonus Disclosure
        You will receive a relationship bonus in the form of Membership Rewards® points for eligible purchases made using your Blue for Business® Credit Card. The number of Membership Rewards points you receive will equal 30% of eligible purchases charged to your Card account during an anniversary year. The relationship bonus will be posted to your Membership Rewards account no later than thirty days after the anniversary of your Card account occurs. Your account must be in good standing to receive your relationship bonus each anniversary year. An anniversary year is 12 billing periods in a row, beginning with the one in which the anniversary of your Card account occurs. Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of travelers checks, purchases or reloading of prepaid cards, or purchases of other cash equivalents. Additional terms and restrictions apply.)

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