Buying miles and points from the IRS with Amex gift cards

UPDATE: This post is out of date. Please click here for up-to-date coverage of paying taxes by credit card, debit card, or gift card.

This is the fourth post in a series dedicated to analyzing options for earning points and other rewards when paying federal taxes.  If you haven’t already, please review the earlier posts:

In posts outlined above, I concluded the following:

  • Using a debit card that offers miles for debit purchases can be a great deal since the cost per point will be extremely low (especially for large tax payments).
  • You can earn a small profit by paying with a 2% cash back (or better) credit card.
  • Using a points or miles earning credit card (especially one that offers bonus points for big spend) can be an inexpensive way to buy points or miles, but you should be sure that you’ll use the points or miles for high value redemptions before you invest in them.
  • Another good option is to use a credit card that offers perks for high spend such as elite status, free hotel nights, or companion passes.  Keep in mind, though, that all of these potential perks have one thing in common: they are worth nothing unless you use them.

Gift Cards

Suppose you want to pay taxes with your credit card in order to earn lots of points and perks, but you’re not thrilled with the prospect of paying almost 2% in credit card processing fees.  Another option is to use your credit card to buy gift cards and then use those gift cards to pay taxes.

There are two types of gift cards to consider for this approach: American Express gift cards, and Visa/MasterCard gift cards.  Each can save you money when paying taxes, but for different reasons.  In this post, I’ll detail how to save money by purchasing and using American Express gift cards.

American Express gift cards

At the time of this writing, the cash back portal TopCashBack is offering 2% cash back for purchases made in the American Express Gift Card store (as long as you start by clicking through from TopCashBack).  You can find signup links for TopCashBack (and many other free to join programs) here.


The goal of buying Amex gift cards through a cash back portal is to earn enough cash back to partially or fully cover the transaction fees associated with paying taxes with a credit card.  The current best rate for paying taxes with an American Express credit card is 1.89% through  So, it looks like you could make a slight profit by doing the following:

  1. Buy Amex gift cards via TopCashBack for 2% profit.
  2. Pay taxes with Amex gift cards with 1.89% fee.
  3. Earn small profit overall.

That’s what it looks like.  The devil is in the details…

The painful details

Earning a profit by buying and using Amex gift cards is harder than you might think.  Here are a number of issues that you may face:

Cashback payout: One issue is that people have had mixed success in getting cash back through TopCashBack when buying Amex gift cards.  Between February 18 and March 13, 2013, in particular, there were technical issues that prevented these transactions from tracking correctly.  Personally, I’ve never had any problems, but I’ve also only bought these gift cards through TopCashBack a couple of times.  Note that even if the purchase tracks and pays out correctly, it can still take 3 or 4 months before the cash is actually paid to you.

Fees: Another issue is that, due to fees, you probably won’t make a 2% profit when buying these cards. Each gift card usually has a $3.95 fee, and there is an additional charge for shipping.  There are often codes available to waive card fees or reduce shipping charges, but these come and go all the time, and there is always a chance that one of these codes will invalidate your cash back.  If you have recently used a discount code and have still received cash back, please help out others by posting details in the comments below.

Low value gift cards: A third problem is that when you first click through to American Express, you will only be shown gift cards with very low total values (most top out at $200).  If you do not find a way to buy these gift cards with waived fees, then each card’s $3.95 fee will eat up your 2% rebate from TopCashBack.  Also, trying to pay large tax bills with a pile of $200 Amex gift cards would surely be an extremely unpleasant experience.  Luckily, there is a simple workaround to this issue.  It is still possible to buy $3,000 personalized Amex gift cards and quite a few readers have reported that cash back is awarded for these purchase.  For details on how to buy these gift cards, please see “Amex takes away $3K cash back gift cards.”

Cancelled orders: It is common to place an order for Amex gift cards only to be told later that the order couldn’t be processed. The message may say “Your order was not fulfilled for the following reasons: We could not verify the information you provided.”  Sometimes the reason may be that you exceeded some purchase limits.  For personal gift cards, the Amex web site says “Your purchase can total up to $5,000.”  And, for business gift cards the site says “Your purchase can total up to $75,000.”  These statements seem pretty clear.  What’s not clear is that there seem to be limits not just within a single transaction, but over time as well.  For details, please see the contents and comments of this post: “Learning Amex gift card rules the hard way.”

Cash advance fees:  If your credit card company treats online gift card purchases as cash advances, then don’t do this!  The only bank I’m sure of that does this is Citibank.  With Chase and Amex you should be fine.  I don’t have personal experience with other banks, though.  If you’re unsure, you can protect yourself by calling your bank and asking them to reduce or eliminate your cash advance limit before you order Amex gift cards.

Financial review: Some people who have ordered large amounts of gift cards from American Express, and have used Amex credit cards to pay, have suffered through American Express financial reviews.  This means that American Express freezes all of your Amex card accounts and requests documentation (such as tax forms) to prove to them that you are able to sustain such high levels of spend (and to pay it back).  Regardless of whether the financial review satisfies American Express, its probably an event that you would prefer to avoid.  So, just note that as a caution before you buy too many gift cards!

Potential profits

Assuming you made it undeterred through the gauntlet of issues detailed above, let’s take a look at how much profit one can make from buying Amex gift cards.  Suppose you buy $5000 of personal Amex gift cards.  Let’s also assume worst-case that you have no valid coupon codes to reduce expenses and that you have not enrolled in Amex’s Premium Shipping Plan.  In that case, you could buy two $2500 gift cards at a time and pay $3.95 each in fees and $9.95 each for shipping:

  • Purchase: two $2,500 Amex gift cards
  • Fees: ($3.95 + $9.95) x 2 = $27.80
  • Cash back: 2% of $5000 = $100
  • Profit: $72.20 = 1.44%

1.44% profit is not 2%, but it’s still pretty good.  And, this is assuming the worst case scenario of having no discount codes and no shipping plan to reduce expenses.  Of course, this does assume that you will get the promised 2% cash back, but be aware that there is always a risk with online shopping portals that purchases will not track correctly.

Paying taxes

Now that you have earned a 1.44% profit from buy Amex gift cards, you could then use those gift cards to pay taxes via  The profit from TopCashBack won’t completely eliminate the 1.89% tax payment fee, but it will be close.

Keep in mind that your gift card will have to have a large enough balance to cover the processing fees.  So, you can’t really make a $2500 tax payment with a $2500 gift card.  Instead, do the math as follows:

  • Fee = 1.89%
  • Card value = $2500
  • Max Payment Amount = $2500 / 1.0189 = $2453.63

If you are paying quarterly estimated taxes, you can make up to two payments per quarter online.  So, with two $2500 Amex gift cards the totals will be as follows:

  • Total Payment Amount: $2453.63 x 2 = $4907.26
  • Total tax payment fees: $5000 – $4907.26 = $92.74
  • Total “loss”: $92.74 – $72.20 (TopCashBack profit) = $20.54
  • Loss as percent of tax payments: $20.54 / $4907.26 = .4%

If you want to make more than two $2500 payments, try calling to see if they can process more than two over the phone.

Is it worth it?

With a .4% loss in paying taxes this way, you can make a profit with virtually any rewards credit card.  Even a lowly 1% cash back card would result in a .6% profit.  And, you can do much better by using one of the credit cards highlighted in my earlier tax payment posts (Buying miles and points and cash from the IRS with credit cards and Buying perks and points from the IRS with credit cards).

So, financially it looks like a win, but there are other factors to consider.  First and foremost, is it worth your time to deal with all of the headaches associated with buying and using American Express gift cards?  Personally, I’ve come to realize that the answer, for me, is no.  I just don’t want to spend so much of my time dealing with these gift cards.  If the Amex gift card headaches don’t bother you, you should also consider whether you have better options for using or cashing out Amex gift cards than by paying 1.89% in tax fees.  Between Amazon Payments, reload cards, and gift cards with PINs, its not too hard to dream up good alternatives.


By using the right credit card to pay, and by maximizing cash back opportunities, it is possible to do well by paying taxes with Amex gift cards.  That said, this approach probably has more complications and potential snafus than most of us are willing to deal with.  And, those that are willing to cross the hurdles are likely to find even more profitable uses for Amex gift cards than tax payments.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

Leave a Reply

22 Comments on "Buying miles and points from the IRS with Amex gift cards"

Notify of

I did customized Amex GCs through TCB in June without using any fee waiver codes and yet tcb still did not track automatically. Had to submit request they look into it and they said it will take months. i personally am very hesitant to use TCB again.


FM I think you need to put an end to promo’ing TCB. While I see you mention it again, I am just not convinced you get the scale of issues people have with them. If you did, you wouldn’t even write about them any more. My advice to everyone reading this is go ahead and use TCB if you are happy with a deal that has maybe a 20% of actually paying you out.


In the above example of 2x$2.5k cards you have fees and shipping twice. You can order 2 or more cards in the same order so this is only 1 shipping fee.
The code PHONEGIFT3 will give fee free and works with TCB. (or at least does for me).
My own TCB success rate is much better than I’ve heard on FT or in the comments but clearly YMMV. Current processing time is 8 weeks.
To increase your chances of tracking once the order is done, go back to TCB and submit a ticket. You should see all the details of your click through, if not you know something has gone wrong. Maybe try small purchase 1st to test.
The other cause of failure is where AMEX thinks the click through comes from somewhere else (even from themselves). These are the most frustrating and the best thing you can do is to use a ‘clean’ browser for this with the cookies and history recently flushed.


TCB blows imho.

So…am I still limited to $1k in VR at 771? 🙂 Is CBS only up to $5k?

Do you realize I had to play a stupid video and type “Small Biz Big Game” in the answer box (the security code!!) to comment here? Is this a new BA feature? It BLOWS even more than TCB. Don’t have the time to endure this before I comment. Fyi!


Still there as of 11.43 EST, fyi.

Will get spg card w/ yr links. One day I will have my own…maybe in 2014:-)

Don’t become like the other retail salesmen ok?


I think TCB may be reaching its end. Although the wait for cashback to become payable has always been long, once payouts were requested they were always fast, like next day. Recently, it took a full week from payout request date to pay date. Also, tracking (particularly Amex GC tracking) had always been fine for me until last month. All of a sudden none of my Amex GC purchases tracked. I have a bad feeling about TCB.


Update to my comment #9: Now TCB apparently won’t even accept missing cashback claims. I’ve been attempting to submit a claim using their online form for my most recent untracked Amex GC purchase, and the form is erroring out every time I try to submit it. It deletes whatever I type in the title field (in this case “Mr” or “Mr.”) and then errors out with the message that a title is required. This is a new issue, as I had no problem submitting cashback claims for my other missing Amex GCs purchases from earlier in July. And an email to TCB customer service about the erroring form has not been responded to. TCB is on its last legs.


Been out of the game for a while due to some personal constraints. Trying to come back. I’ve got 5k of Amex GCs that I purchased about 3-4 months ago.

Can I still buy the Visa GCs from Giftcardmall to squeeze anything more out of this before making my tax payment? OR is that route closed now?


[…] Pay federal taxes.  You will incur a 1.89% fee, but that can be partially or wholly offset by cash back earned when buying Amex gift cards. […]


Chase and Barclays are now charging cash advance fees on these.


Also Capital One has CA on these cards.


[…] Pay federal taxes.  You will incur a 1.89% fee, but that can be partially or wholly offset by cash back earned when buying Amex gift cards. […]


I just got off the phone with ValueTaxPayment – and was told that no gift cards can be used to pay taxes. The balance of $3000 is confirmed but I cannot spend via ValueTaxPayment. Any recommendations? PS. My plan is / was to pay 1040-ES payments 2 times per quarter @ $3000 each payment.


I’m sorry my attempted payment was declined by ValueTaxPayment and I was told by an AmEx customer service person that AmEx gift cards cannot be used to pay taxes.


[…] Hey ..anyone try this lately..picked this up on the FM board….Use AGC to pay FIT…at a profit is dead? Marty says: July 17, 2014 at 11:43 am I just got off the phone with ValueTaxPayment – and was told that no gift cards can be used to pay taxes. The balance of $3000 is confirmed but I cannot spend via ValueTaxPayment. Any recommendations? PS. My plan is / was to pay 1040-ES payments 2 times per quarter @ $3000 each payment. Reply FrequentMiler says: July 23, 2014 at 7:53 am Did you try Reply Marty says: July 17, 2014 at 11:45 am I’m sorry my attempted payment was declined by ValueTaxPayment and I was told by an AmEx customer service person that AmEx gift cards cannot be used to pay taxes. Reply FrequentMiler says: July 23, 2014 at 7:50 am Yikes, sorry to hear that. Thanks for letting us know about that restriction. Reply – See more at:….UKIWPhZw.dpuf […]