We’ve got taxes on the brain, with the IRS estimated tax deadline just around the corner on September 15. A while back, TPG Lounge reader Lisa E. asked about the possible benefits of paying her taxes to the IRS with a credit card, if anyone had previously done it and if so, what the pros and cons would be. Here’s a look at some of our favorite answers. (Some responses have been lightly edited for style and clarity).
Success StoriesSeveral TPG Lounge readers responded with stories about how they’d used credit cards strategically to meet minimum spending amounts, even using them to earn points and miles toward epic vacations.
“I opened a new card to pay. The fee [charged] by the IRS was worth it. Paying with my new card met the minimum spend and I had free tickets to Hawaii. When life hands you lemons, make lemonade!” — Katrina L.
“Last year I did it and got 5,000 SPG bonus points for spending through a targeted offer I wouldn’t otherwise have used. It was a great return, even without counting the float.” — Michael K.
“Yes, 1.87 percent is worth it for me to hit spend requirements and obtain the points and miles in return. I personally use it to rack up EQD spending on American Airlines since my everyday cards like Chase Sapphire Reserve get way more value in my wallet than AA miles cards. These fees are also deductible if you itemize.” — Nelson S.
“I did one year when the Delta Amex Card had a 3x miles deal. The IRS charges a fee, but there’s a calculator so you know what that is.” — Nancy S.
“I paid by Delta Amex and that got me to Silver Medallion status for the first time. Well worth the fee.” — Sharron B.R.
“I use pay1040.com, which charges 1.87 percent, and put it on my Bank of America Premium Rewards credit card, which pays back 2.625 percent for a net gain of 0.755 percent.” — Steven S.
“I just completed my SPG Business Amex initial spend paying my taxes. Getting the 25,000 points were well worth the $70. Zero aggravation. Priceless. (Yes, I have contacted Amex about the 35,000 offer).” — Dawn B.
One reader met her minimum spend paying taxes and was able to plan a vacation to Hawaii! (Photo by Unsplash).
Yes, But Only In Certain Situations
Others agreed, saying they also paid the IRS with a credit card, but only in certain cases when it benefitted them the most.
“If you can time the payment to coincide with a new card and minimum spend, the payback could certainly be there.” — Richard R.
“When I need to meet a sign-up bonus.” — Jeff B.
“It’s worth checking if your state accepts credit cards. South Carolina actually has no fee for paying with a credit card for state income taxes, though my county charges 2.5 percent or so for county property taxes.” — Josh L.
Weigh the Pros and Cons FirstSome readers figured it was best to play it safe and think about what the possible benefits could be vs. any downsides to using credit cards to pay taxes, like incurring extra fees.
“Pro: you get points. Con: there is a 1.87 percent fee.” — Benjamin W.
“The con is there will almost be a surcharge. I wouldn’t unless you’re short a sign-up bonus requirement.” — Ronald S.W.
“Seems most of the authorized tax payment service providers charge 2 percent or less. Even a Chase Freedom Unlimited Card or Chase Sapphire Reserve application ends up yielding 0.25 percent in favorable earnings.” — Sebastian K.
It’s always a good idea to check out the pros and cons of any major decision, especially credit card use. (Photo wutwhanfoto/Getty Images)
Readers Helping Readers
We love it when our TPG Lounge readers get so engrossed in a topic they feel the need to reach out and help answer each other’s questions. That’s what happened when reader Lisa S.C. asked about credit card fees counting toward next year’s taxes
“I think I also read that fees are deductible on next year’s taxes?!” — Lisa S.C.
“Remember that new tax bill? Pretty sure if they were deductible, they aren’t anymore.” — Mike K.
“This is a miscellaneous deduction so only applicable once the miscellaneous total exceeds 2 percent of your adjusted gross income. It is a high bar most don’t — and don’t want to — get to.” — Tom A.
Another reader mentioned wanting to use TurboTax to pay off his taxes, which prompted some personal advice from fellow TPG Lounge member Michael K.
“I will [pay with a credit card] for the first time this year to help meet the minimum spend on The Platinum Card® from American Express. I was just going to pay through TurboTax, which charges a 2.49 percent fee.” — Mike Z.
“Don’t do it through TurboTax. It’s so easy not to. Just file like you’re going to pay by mail, then go to the IRS website to select the lowest cost provider.” — Michael K.
Featured image by Shutterstock.
American Express rolled out two premium co-branded hotel credit cards in 2018: The Hilton Honors Aspire Card from American Express and The Starwood Preferred Guest® American Express Luxury Card. Both cards carry $450 annual fees and come with similar benefits, such as elite status and annual free night certificates. But is one card better than the other? Let’s take a side-by-side look to find out.
Main Benefits and FeaturesHere are the basics of each of these two cards in the major categories:
| Hilton Amex Aspire | SPG Luxury Amex | |
| Annual Fee | $450 | $450 |
| Welcome Bonus | 100,000 points after spending $4,000 in the first 3 months | 100,000 points after spending $5,000 in the first 3 months* |
| Earning Rates | 14x at Hilton hotels 7x at US restaurants, flights booked directly with airlines and car rentals booked directly from select car rental companies 3x on all other purchases | 6x at Marriott hotels 3x at US restaurants and on flights booked directly with airlines 2x on all other purchases |
| Credits | Up to $250 in statement credits for purchases at participating Hilton resorts Up to $250 in statement credits for incidentals from an airline of your choice Up to a $100 credit for incidentals every time you book at least a two-night paid stay at a Hilton property | Up to $300 in statement credits for purchases at participating Marriott hotels |
| Elite Status | Automatic Hilton Honors Diamond status | Automatic Marriott Gold status
Earn Platinum status after spending $75,000 in a calendar year |
| Free Night Certificates | Annual free night at almost any Hilton property worldwide after opening your account and on your card-opening anniversary each year.
Earn an a second weekend night after spending $60,000 in a calendar year |
Annual free night (up to 50,000 points) after card renewal |
| Other Benefits | Priority Pass Select membership (with guesting privileges) No foreign transaction fees Access to Amex Offers | 15 elite night credits (beginning in 2019, limited to once per member not once per credit card) Global Entry/TSA PreCheck application fee credit Priority Pass Select membership (with guesting privileges) No foreign transaction fees Complimentary Boingo Wi-Fi access Access to Amex Offers |
Although both cards are currently offering 100,000-point welcome bonuses, the two are not equal.
Hilton Amex Aspire: 100,000 points after you spend $4,000 within the first three months of account opening. Based on TPG’s latest valuations, 100,000 Hilton points are worth $600. It is worth mentioning, however, that this is the same bonus offered by the lower-tier Hilton Honors American Express Ascend Card, which also has a smaller total minimum spend required in order to get the points. Also, note that the Hilton Amex cards will be offering elevated welcome bonuses for a limited time starting on September 11 — if you get in on that, you could earn 150,000 points with the Aspire, and 125,000 points with the Ascend.
SPG Luxury Amex: 100,000 points after you spend $5,000 within the first three months of account opening. That’s worth $900 based on TPG’s most recent valuations and is the highest offer we’ve seen for any co-branded SPG card. The only downside is that this elevated bonus is only available until October 31, 2018, so you’ll need to apply soon if you hope to take advantage of it.
Winner: SPG Luxury Amex. Marriott points are worth 50% more (0.9 cents apiece, compared to 0.6 cents apiece for Hilton points), making the card’s welcome bonus worth $300 more. The SPG Luxury Amex does require an additional $1,000 of spend within the same timeframe as the Hilton Amex Aspire, but there are plenty of ways to easily meet the higher minimum spend requirement even if you have low monthly expenses, such as picking up the tab when dining out with friends and purchasing gift cards.
Hilton Amex Aspire: Earn 14 points per dollar spent at hotels in the Hilton portfolio. Based on TPG’s valuation of 0.6 cents per point, that’s an 8.4% return on spending. However, in actuality, the return on paid stays is even greater. Since the card comes with complimentary Hilton Honors Diamond status and one of the benefits of that status is a 50% point bonus for Hilton stays (or 15 points per dollar at most Hilton properties), you’ll actually be earning a total of 29 points per dollar on most Hilton stays as a cardholder, meaning a 17.4% return. You’ll also earn 7 points per dollar spent (a 4.2% return) on flights booked directly with airlines or at amextravel.com, car rentals booked directly from select car rental companies (Alamo, Avis, Budget, Dollar, Enterprise, E-Z, Fox, Hertz, National, Payless, Sixt and Thrifty) and at US restaurants; and 3x points (a 1.8% return) on all other spend with the card.
SPG Luxury Amex: Earn 6 points per dollar at participating Marriott hotels, 3 points per dollar points at US restaurants and on flights booked directly with airlines, and 2 points per dollar points on all other purchases. With TPG’s recent valuations in mind, that’s essentially a return of 5.4% on Marriott purchases, 2.7% on restaurants and flights and 1.8% on everyday spending.
(Photo courtesy of The St. Regis Bora Bora)
Winner: Hilton Amex Aspire. The Aspire Card has much more rewarding earning rates for bonus purchases than the SPG Luxury Amex — or any other co-branded hotel card on the market.
RedeemingHilton Amex Aspire: Although points can be redeemed for gift cards and transferred to airlines (at a roughly 10:1 ratio), you’ll get the most value out of your points by sticking with standard award nights. Since Hilton has a variable award chart, you should get fairly consistent value from your points year-round, though there’s nothing to stop a property from suddenly increasing their standard award price. An option worth considering when staying at top-tier properties is to use points to subsidize paid stays with the Points & Money option — this will get you an outstanding redemption value of up to 1 cent per point.
SPG Luxury Amex: Now that Marriott, Ritz-Carlton and Starwood Preferred Guest (SPG) are officially one, you can seamlessly redeem points toward free stays at over 6,500 properties across 29 brands in 127 countries. The newly combined program has many sweet spots, including legacy SPG suites-only properties like the St. Regis Maldives and the Al Maha in Dubai for a maximum of 60,000 points per night for a standard room, or 85,000 points per night come February 2019. However, what makes Marriott points stand out from other hotel points currencies the most is that there’s also potential for some great value when turning points into airline miles. Marriott points can be transferred to 45 frequent flyer programs, mostly at a pretty solid 2.4:1 ratio, factoring in the 5,000-mile bonus given for every 60,000 points transferred.
Winner: SPG Luxury Amex. Whether you’re looking to redeem points for free stays or free flights, there are many ways to get tremendous value out of Marriott Rewards points.
Where both cards shine the most are the extensive perks they offer for travel.
Hilton Amex Aspire: The Aspire card comes with several statement credits which on their own more than offset the card’s annual fee. Each year, you’ll get a $250 Hilton resort statement credit which can be used toward room rates and taxes. Similar to that of the Platinum Card® from American Express, which offers a $200 annual credit, the card comes with an annual $250 airline fee credit that can be used to offset a wide variety of airline fees such as checked bag fees, change fees, in-flight food and beverage purchases and even some airline gift cards. Plus, you’ll get a $100 credit for incidentals every time you book at least a two-night paid stay at a Hilton property. You’ll receive one weekend night at almost any Hilton property worldwide after opening your account, and then again each year on your cardmember anniversary and can earn a second weekend night by spending $60,000 on the card in a calendar year.
(Photo courtesy Conrad Hotel, Dublin)
The card’s most valuable travel perk is automatic top-tier Hilton Honors Diamond status for the primary cardholder. Diamond status comes with perks like bonus points, executive floor lounge access, breakfast and room upgrades, among other benefits — and it’s worth about $2,000 annually according to our estimation. Non-Hilton travel benefits include a Priority Pass membership (with guest privileges) and no foreign transaction fees.
SPG Luxury Amex: Each year, you’ll get up to a total of $300 in statement credits for Marriott and SPG purchases charged to your card. Like with the Aspire Card, the credit doesn’t only apply to incidentals, but also room rates themselves. Primary cardholders receive automatic Gold status and the ability to earn Platinum after spending $75,000 in a calendar year. Gold status come with benefits upgrades to enhanced rooms and a 25% point bonus on hotel spending. Platinum status is much more coveted and includes perks like upgrades to suites, free breakfast and lounge access. Beginning in 2019, cardholders will receive 15 elite qualifying night credits per year. The card also comes with an annual free night award worth up to 50,000 points. Like many other premium cards, the SPG Luxury Card comes with a Priority Pass membership (with guesting privileges) and will reimburse you when you charge the application fee for Global Entry or TSA PreCheck to the card (up to $100). Other non-Marriott benefits include free enrollment in the Boingo Preferred plan, which gets you unlimited Wi-Fi access at airports and other locations around the world, and no foreign transaction fees.
Winner: Hilton Amex Aspire. Although both cards offer highly lucrative travel benefits, the Aspire Card comes with more valuable statement credits and free night certificates. Plus, cardholders receive top-tier elite status without having to reach any minimum spend.
With both being premium Amex cards, the rest of the Aspire Card and SPG Amex Luxury Card‘s benefits are practically identical. The two include access to Amex Offers and carry travel protections like secondary collision damage waiver, lost baggage reimbursement and travel accident insurance, as well as purchase protection benefits like extended warranty and return protection.
(Photo by Irina Dobrolyubova / Getty Images)
Winner: Tie.
The right card for you ultimately depends on which hotel chain you’re more loyal to. The Hilton Amex Aspire and the SPG Luxury Amex are respectively Hilton and Marriott’s best of the best. If you’re not loyal to either brand, you’ll probably want to pick the Aspire Card for the better earning rates and superior travel benefits, like top-tier elite status, a resort credit, airline fee credit and $100 property credits for every two-night stay.
That said, you could make a case for carrying both cards given how easy it is to offset the SPG Luxury Amex’s annual fee thanks its perks like the annual statement credit and annual free night certificate. As a reminder, if you’re interested in picking up the SPG Luxury Amex, you’ll want to do so before October 31, 2018 in order to get the elevated 100,000-point welcome bonus.
For more on the Hilton Amex Aspire card:
Hilton Amex Aspire Review 7 Reasons to Get the Amex Hilton Aspire Card How to Maximize the Hilton Amex Aspire CardFor more on the SPG Luxury Amex card:
SPG Luxury Card Review What’s Covered by the SPG Luxury Card’s $300 Credit? SPG Amex vs. SPG Luxury Amex: Which Card Is Right For You?
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