4 ms·

This is what we called premature optimization. If you owe big money on taxes, spend your energy and effort to figure out how to reduce that, not on credit card

by aynyc 3y ago

This is what we called premature optimization. If you owe big money on taxes, spend your energy and effort to figure out how to reduce that, not on credit card points.

pb7 3y ago
They’re not mutually exclusive. A W-2 employee has very few ways to reduce taxes and no amount of energy or effort will change that.
- aynyc 3y ago
  If you are on w2 and owe big taxes, then you are intentionally under withholding. Unless you won IPO or buyout jackpot, then spend your time planning your retirement, not credit card churn (unless that’s your plan all along).
  - pb7 3y ago
    >then you are intentionally under withholding What’s wrong with that? You can pay estimated quarterly taxes with a credit card too. Many churners do.
    - aynyc 3y ago
      Nothing wrong with churning, but it's not within the context of this post. Your goal is to churn, tax happened to be one of the venues. But for most people, churning is the wrong approach because their taxes are the biggest issue.
      - pb7 3y ago
        If you have legal strategies for avoiding paying 6 figures in taxes ever year, I'm all ears.
  - deleted 3y ago
    [deleted]
  - dheera 3y ago
    > If you are on w2 and owe big taxes, then you are intentionally under withholding. No, many W2 people also have investments and capital gains, and it's very easy to owe big taxes without under-withholding. Also, if your W2 income is, say, $500K, it's not out of the ordinary to owe another $10K or $15K even if you don't intentionally under-withhold. It's not within penalty territory but more than enough to get a sign-up bonus or two and get a couple thousand of it back in cashback, air tickets or hotel stays and things you'll use anyway.
dheera 3y ago
No. This is not premature optimization. I have all the money to pay the taxes, it's just that I can actually come out ahead by paying with a credit card, paying it off right away, and then taking the points and sign up bonuses on multiple credit cards. If you owe $20K in taxes, you can totally sign up for 3 or 4 cards and reap all the bonuses in one fell swoop. 2 payments per processor, PayUsaTax is 1.85%, Pay1040 is 1.87%, as long as your sign-up bonuses can beat those numbers (they easily do on many cards, see my other comment below), you can get 4 sign-up bonuses easily. I already am doing everything I can possibly do within legal bounds to reduce my tax bill. 401K, IRA, credits, you name it, I have it. The credit card thing is just at least getting my cherry back after the government took my cake.

by aynyc 3y ago

This is what we called premature optimization. If you owe big money on taxes, spend your energy and effort to figure out how to reduce that, not on credit card points.

pb7 3y ago

They’re not mutually exclusive. A W-2 employee has very few ways to reduce taxes and no amount of energy or effort will change that.

aynyc 3y ago
If you are on w2 and owe big taxes, then you are intentionally under withholding. Unless you won IPO or buyout jackpot, then spend your time planning your retirement, not credit card churn (unless that’s your plan all along).
- pb7 3y ago
  >then you are intentionally under withholding What’s wrong with that? You can pay estimated quarterly taxes with a credit card too. Many churners do.
  - aynyc 3y ago
    Nothing wrong with churning, but it's not within the context of this post. Your goal is to churn, tax happened to be one of the venues. But for most people, churning is the wrong approach because their taxes are the biggest issue.
    - pb7 3y ago
      If you have legal strategies for avoiding paying 6 figures in taxes ever year, I'm all ears.
- deleted 3y ago
  [deleted]
- dheera 3y ago
  > If you are on w2 and owe big taxes, then you are intentionally under withholding. No, many W2 people also have investments and capital gains, and it's very easy to owe big taxes without under-withholding. Also, if your W2 income is, say, $500K, it's not out of the ordinary to owe another $10K or $15K even if you don't intentionally under-withhold. It's not within penalty territory but more than enough to get a sign-up bonus or two and get a couple thousand of it back in cashback, air tickets or hotel stays and things you'll use anyway.

dheera 3y ago

No. This is not premature optimization. I have all the money to pay the taxes, it's just that I can actually come out ahead by paying with a credit card, paying it off right away, and then taking the points and sign up bonuses on multiple credit cards. If you owe $20K in taxes, you can totally sign up for 3 or 4 cards and reap all the bonuses in one fell swoop. 2 payments per processor, PayUsaTax is 1.85%, Pay1040 is 1.87%, as long as your sign-up bonuses can beat those numbers (they easily do on many cards, see my other comment below), you can get 4 sign-up bonuses easily. I already am doing everything I can possibly do within legal bounds to reduce my tax bill. 401K, IRA, credits, you name it, I have it. The credit card thing is just at least getting my cherry back after the government took my cake.