I Paid My Taxes and Earned Nearly 70k American Airlines Miles — Here’s How

Updated: August 23, 2024, 9:38am CDT

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How I Used My Tax Bill To Earn AA Miles
Turn Your Tax Bill Into Points and Miles
Final Thoughts

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It’s that time of year to file your tax return. If you’re a procrastinator like me, be sure to get it done before April 15 or ask for an extension. In any case, if you find yourself owing the government, you can potentially earn some valuable rewards along the way.

Each year, I do my best to have a credit card in mind around tax time strategically. If I end up with a significant tax bill, I immediately apply for a card with the intent of paying my tax bill with a credit card.

This year, I was able to score nearly 70,000 American Airlines miles by paying my taxes with the CitiBusiness^® / AAdvantage^® Platinum Select^® Mastercard^®.

Here’s what you need to know about paying your taxes with a credit card and the step-by-step process to do it.

How I Used My Tax Bill To Earn AA Miles

I anticipated owing taxes for the 2023 tax year, and sure enough, my tax preparer said I owed $3,582 in federal taxes. I live in Florida, so I have no additional state income tax.

After my appointment, I found the CitiBusiness Platinum Select card a great fit for this expense with the following welcome bonus offer:

Earn 75,000 bonus miles after spending $5,000 in the first 5 months.

I did have to account for a 1.82% fee, which came out to be roughly $65, but the points were well worth it in comparison.

After this charge, I followed with a few miscellaneous purchases to achieve the spending minimum, leaving me with just over 69,000 American Airlines miles. We estimate these miles are worth 1.4 cents apiece for flights, which leaves me with $966 in miles. Even if you subtract the online convenience fee I paid by using a credit card, that is still $900 in value.

The CitiBusiness Platinum Select card comes with a $0 intro annual fee for the first year, then $99. But when it all shakes out, this was an easy score from an airline credit card.

Turn Your Tax Bill Into Points and Miles

There are several ways you can pay your tax bill if you owe, with the cheapest method being IRS Direct Pay. The IRS takes out what is owed from your checking or savings account at no cost.

But if you want to earn credit card rewards, you can pay your entire tax bill using a credit card. The IRS works with 3 third-party payment processors that charge variable fees for using a debit or credit card to pay your taxes.

IRS-Tax-Payment-Options — Image Credit: IRS

The easiest choice is to use payUSAtax as it has the lowest fee. From there, you will input your tax information and pay your tax bill normally. From there, pay off your credit card statement to avoid any interest or fees eating into the value of the rewards.

Hot Tip:

It’s vital to run the numbers on this to ensure it’s worth paying your taxes with a credit card. For example, if you use a cash-back credit card that earns 1% back, you will end up paying more than you should. So, if you’re considering using a credit card for your tax bill, be sure to weigh the rewards against the fee you will pay.

Final Thoughts

Credit card welcome offers can be a great way to earn rewards on larger bills that you must pay anyway, like insurance premiums, car repairs, or tax bills.

But before you swipe your card for that large purchase, be sure that you’re able to pay the balance right away. If you end up racking up interest charges, those fees can quickly nullify any value you’ve earned.

The information regarding the CitiBusiness^® / AAdvantage^® Platinum Select^® Mastercard^® was independently collected by Upgraded Points and not provided nor reviewed by the issuer.