Pay Federal Taxes via Credit Card for Free

Avid points & Miles collectors are always on the lookout for opportunities to increase credit card spend without fees.  Taxes, mortgage payments, rent payments, car payments, etc. are great examples of large expenses that many would like to pay with credit cards, but high fees for paying by credit card are often a barrier.

For Federal Taxes, the IRS maintains a web page that links to service providers who make it possible to pay taxes via credit or debit card.  See “Pay Taxes by Credit or Debit Card.”  This is great if you have a mile-earning debit card since debit fees are very low.  However, most of us have credit cards (or charge cards which work the same as credit cards), and the credit card fees are quite steep.  Here is the fee chart:


The lowest fee for paying with a MasterCard or Visa is 1.89%, and the lowest fee for paying with an American Express card is 2.29%.  Debit cards, though, have only a single fixed fee per payment of $3.49 to $3.95.  The larger the payment you make, the lower this fee is as a percentage. With a $1000 payment, for example, the fee is less than half of one percent.

Pay Taxes for Very Low Fees

One easy way to lower your fees is to buy American Express gift cards for cash back and then use those cards to pay your taxes.  Currently, for example, BigCrumbs is offering 2.25% (or, temporarily, 2.5%) cash back if you go through their portal to American Express Gift Cards and buy the cards there.  For details, please see my post “Big News at BigCrumbs.”  Note that depending on which cards you choose, which shipment method you go with, and which discount codes you input, you will have fees that lower your effective rebate.

If you then use those American Express gift cards to pay taxes via you will be charged 2.29% in fees.  The exact cost of paying taxes will then depend on your effective rebate from BigCrumbs, but overall it should be very low.

Pay Taxes for No Fee (or make a profit!)

If you add another step to this process, you can reduce your fees even more.  You might even make a nice profit!  Here’s the trick:

  • Buy Visa gift cards: After buying Amex gift cards as described above, go to and buy one or more $1000 Visa gift cards.  Pay with your Amex gift card.  I did this recently with a $1000 Amex gift card.  I chose to buy a Visa gift card for $992 so that the fees and shipping costs would come as close to $1000 as possible ($999.94) in order to clear out my Amex gift card.
  • Pay Taxes via Debit card: Use the resulting Visa gift cards to pay Federal Taxes.  These cards can be used as debit cards so that your fee will be less than $4 per payment.  For step by step instructions for paying with a Visa gift card online, see “How to pay Federal taxes with a Vanilla Visa.”  Even though that post describes how to pay with $500 Visa cards, the basic steps are the same.  Make sure to scale up the payment amounts though!  See the next step:
  • Clear out your gift card: Pay exactly the amount that will clear out your Visa gift card.  For example, if you have a $992 Visa gift card and the fee for paying by debit card is $3.49, then pay $992 – $3.49 = $988.51.  This way, the one payment will leave a zero balance on your Visa card and you can then toss it in the trash (once you receive confirmation of the payment).
  • Take it bigger: The online services only allow two payments at a time, but I found that by calling Official Payments Corporation (1-888-872-9829), the phone agents will happily accept as many debit payments as you care to make.  So, if you need to make more than $2000 in payments, try that method.

By going through the method described above, your fee for paying taxes is reduced considerably.  Let’s add up the fees:

  • GiftCardMall: Approximately $8 per card
  • Tax payment: $3.95 (or less) per payment
  • Total: $11.49 per payment.  If we assume a payment of $988.51 (as described above), this amount to a fee of  = 1.16% fee

Remember that you would have bought these gift cards with Amex gift cards in which you gained over 2%.  In total, you can not only pay taxes for free, but earn a profit!

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  1. Oh no. Stop the madness. On second thought, keep it coming! My husband is going to freak when I casually mention that I’d like to pay our taxes this way…

  2. I normally always see a refund on my personal taxes. Is this also an opportunity to overpay knowing it would come back? Or is that just ridiculous. Which Im guessing now that I typed that, it is.

  3. Mike H – I try to make a big overpayment with an extention payment a day or so before I e-file and usually get it back electronically quickly. I have been doing this for awhile with the old United Mileage earning Debit card. Never had any issues. Have been making my recent estimates with Visa Debit cards purchased at OD with INK and calling Official Payments to process the multiple payments.

  4. Awesome. Thank you.

    So I went over to, and it looks like their cards cost $3.95 activation + $1.99 shipping = $5.94 (slightly less per card for multiple card orders), but your article estimates the cost of the card at $7.94. Am I overlooking some $2 charge?

    • Adam: Yep, I forgot to write about that. The amount I listed is based on upgrading shipping to “UPS critical mail, Trackable”. Seems worth it to me to pay an extra 2 bucks over the non-trackable option.

  5. Holy Wow! Intriguing. Lets say I get prepped and submitted through e-file on Feb 1st, normally. And always get a couple K back. I’d overpay like a week out and just get it back through my refund as an overpay? If you want this offboard feel free to email me. 🙂

    • bill: Great idea to setup an affiliate link. I’ll see if I can get one. If so, I’ll update this post with it once I do. Regarding fatwallet, I believe they exclude Visa gift cards from the 1% back. Here is a slight workaround: you can buy GiftCardMall’s e-gift cards for up to $200 each and get 1% back for that. Then you can apply the e-gift card to your Visa gift card order. The only problem is that you are limited to using one e-gift card per order, so the most you can get back by this method is $2 per $1000 Visa card. I didn’t write about it because it seems like a lot of trouble for very little gain.

    • Debbie Schroeder: yes, you can use Bluebird instead. What I published here is an approach to running up credit card spend that doesn’t depend on having friendly drug stores nearby 🙂

  6. You guys are playing with fire here. I’m sure the IRS is fine with people paying legit taxes owed with credit/debit cards. No problem. I don’t think they’d even care about you making a profit by doing the Big Crumbs thing. But, deliberatly overpaying your taxes using these methods a few days before you get your refund? Come on. Do you really want to have the IRS be part of your little money-making ventures? I can think of a lot safer ways to make a few points. This isn’t a bank you’re playing with.

    • karen: You can use multiple Vanilla gift cards, but you still need to pay $3.95 for each one.

      JohnnieD: Probably. You may have to call Amex to register your name and address to the card first.

  7. Wouldn’t the Wells Fargo debit card work as well? The load charge is only $5 per $2500 I believe. It would be nice to see a comparison of cpm between WF and Vanilla Visa and Blue Bird.

  8. @bangkokiscool Regarding WF Prepaid, don’t they cap each transaction at 600.00 per day or purchase or something similar? This could be expensive if you have to make multiple payments with fees each time to meet a large tax payment.

  9. Messing with the IRS could be dangerous. I personally would not do anything that would have a chance of raising flags with the IRS. Great thinking though! I will have to pass on this one.

  10. To echo what Dave said above, I don’t think the AMEX gc from the Big Crumbs deal can be used to directly pay Fed taxes; I think it’s only Visa/MC debit cards. Or is FM implying that we use the AMEX gc as a “credit card” on those sites and eat the 2.3% fee? I just bought a $3K AMEX gc from BigCrumbs and I’m trying to think of ways to unload it.

    • Dave/David: If you use the Amex cards to pay taxes then you have to treat them as credit cards and pay the 2.29% fee. If you use the Amex cards to buy Visa gift cards then you can pay as debit with those gift cards.

    • aegt: Ha! Maybe he’ll open a tax preparation service.

      mikeef: There are only 3 service providers (but 4 web sites). Yes, you can do 6 payments across the 3 service providers online. I asked an IRS tax adviser if that was OK and he said yes. I don’t know if that might increase odds of an audit though, so watch out for that!

  11. Are ALL the visa GCs purchased at a debit prepaid?

    If so, can you just USE this debit to load bluebird straight at walmart?

  12. Dear Suntrust:

    I’ve found someone else. No, no, don’t cry. It’s not you, it’s me. Actually, that’s a lie. It is you. If I use my ST card, all I get is crappy Delta miles. But if I go through FM’s method, I can have pretty much anything I want. FM opened my eyes to miles the arts: music, clog-dancing, WrestleMania. His work has meant so much to so many.

    And a cookie to anyone who gets that movie reference.

  13. @mikeef: Hot Shots (Part Deux). But before you kiss of your friend from Atlanta, keep in mind that she will only cost you one paltry payment for your entire tax bill. Admittedly she only pays you is skypesos, but the limits on gift cards and separate payment for each suggests to me that she may be the way to go for larger payments.

  14. Coincidentally enough, the Office Depot near me in Massachusetts stopped selling gift cards over $100 today. Every single rack with a card over $100 was emptied out to the listing on the wall itself. Was told a week ago when I bought two $500 Vanilla Visas that I needed to pay with cash for anything more than $200, but I asked the teller to try the transaction with my Ink Bold and it went through. Wonder if this is a local thing or a national one…

  15. Data point: used a prepaid amex (pre-bb) to buy an amex gift card, make some extra profit (or recover VR fees). Already earned 5x pts on it back in the day, figure I could come out ahead when I empty it into tax payments per the above. Thanks, FM.

  16. @eddy: Agreed, there is value in ST. Also, I’m not paying anything for those points, as opposed to .41% for whatever points I choose with my payment. But if I can call OP and make multiple payments over the phone, that could definitely be worth it.

  17. Never mind. Email today: “Thank you for placing your order with American Express Gift Cards. Unfortunately, we cannot fulfill order #1056—- at this time. Your order was not fulfilled for the following reasons: At this time we do not accept gift cards as a form of payment.”

  18. Looks like using Amex gift cards to buy Giftcardmall GCs are not working.

    Sigh. Sometimes I wish people would keep some things on the down low…

  19. Hello, I have never tried before.
    Lets say if I was to purchase a Visa gift card for $1000 at giftcardmall site and use my regular credit card to pay, does this show up as purchase on the CC statement or cash advance?
    Additionally, do you know if I can have my name written on the $1000 gift card.

  20. Sorry if I missed this after reading this post– I purchased a onevanilla $500 prepaid visa card. It is a debit card. Wouldn’t these be ok and charged a fee of just 3.49. Unfortunately, I have about $9000 to pay by the 15th.

  21. I probably have to make a large tax payment this year. Loading up the max amount on one bluebird and the rest on my partners should cover it. Vanilla reloads seem to be scarce but still available in my area. Or would you recommend a different card, like the MyVanilla visa.
    Does anyone have any confirmed tax payment site that take the bluebird? This one seems to, I assume it doesn’t treat it like a credit card and charge a percentage fee?

  22. Just found out the hard way that paying tax with bluebird is not a debit but a credit transaction, so looks like I may have to get MyVanilla Debit after all. Going to have to make sure to swipe once every 90 days (Good for estimated payments) so I don’t get hit with the inactivity fee.

  23. I have close to 20K in taxes I owe this year and I’m trying to figure out the best way to pay. We can no longer purchase $500 VR at OD and BigCrumbs is down to 1.4% for American Express GC. Any ideas? Please help!

  24. Happy to report that I just put through $6,000 in estimated tax payments using exactly the method outlined above. Even with only 1.4% BC cash back I came out slightly ahead!

    Using the free shipping trial and ordering in bigger size will make the process even more cost effective going forward.

    Thank you Frequent Miler!!!

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