# How to Earn 3.3% Cash Back Paying Your Taxes

Posted by Madison on March 11, 2014

If you are getting a tax refund, you can take advantage of deals to boost your refund like the Amazon 10% Bonus on Your Federal Tax Refund.

However, if you owe taxes, then you might have to look a little harder to find a good deal… but the good news is they do exist!

I’ve outlined in the past how to Pay Taxes with Credit Cards to Earn Cash Back, but what if the processing fees are higher than your cashback? Or if they’re so close it’s not worth the trouble? Here’s a workaround I used this week to earn 3.3% cash back on a tax payment.

3. Select 3% cash back (available this week).

1. Go to Pay USA Tax.
3. Pay your tax and a credit card convenience fee of 1.87%.

### Credit Card Cash Back

Meet Spending Requirements. This strategy is a great way to meet spending requirements on new bonus cards. I needed to hit some spending requirements on various cards from my \$1,720 + 267k Point Credit Card Application Spree, including my new British Air and Virgin Atlantic cards.

Maximize Cash Back. If you aren’t working on a spending bonus and you want to maximize the cash back, pick your favorite card with the maximum cash back. Mine highest cashback card for everyday spending is currently the Barclaycard Arrival card.

### Do The Math

Here’s how the math broke down for me. I purchased 3 x \$3000 gift cards worth \$9000:

• American Express Fees of \$3.95 x 3 = \$11.85
• Top Cash Back: \$269.46
• Tax Payments: \$2944.93 x 3 = \$8834.79
• Pay USA Tax Fees of \$55.07 x 3 = \$165.21

While I spread my purchases across the various cards (for spending bonuses), to make the calculations more straight forward and easy for you to replicate, let’s assume I put all the charges on the Barclaycard Arrival card, then it would be worth: 18022 miles, which is redeemable for \$180 in travel credits to earn an additional \$18 in rewards.

Total Profit:

• Rewards: 269.46 + 198 = \$467.46
• Fees: 11.85 + 165.21 = \$177.06
• Profit: \$290.40

Total Cash Back on Tax Payments: 290.40 / 8834.79 = 3.3%

### In the Future

If you aren’t ready to pay your taxes yet, and probably won’t be ready until the tax deadline, you can still take advantage of the deal, but the numbers might be slightly different.

The cash back percentages at TopCashBack routinely change. You can use Cash Back Monitor to find the highest paying cashback website at the time of purchase to make sure you maximize your deal.

### Which Cards to Use

You need to make sure that your credit card won’t be charged a cash advance when buying American Express Gift Cards. In other words, avoid Citi cards and US Bank cards. I used Chase, Bank of America, and Barclays without problems this month. And obviously, Amex will count it as a purchase since they are selling the product. However, to be sure, you can lower your cash advance limit to \$0 on any card before making the purchases.

### More on Credit Card Cash Back

If you're looking for a new credit card, be sure to check out our credit card directory!

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### Comments to How to Earn 3.3% Cash Back Paying Your Taxes

1. i assume you purchase the amex biz gift card? the limit on the consumer gift card is \$500. also on the pyausatx website there is a note “*Business credit cards are 2.29% (except American Express)” i assume for amex its 1.87%?

anonymous

• Yes, I selected the business cards so that I could go above \$500 on each card and minimize the fees.

And yes, the Pay USA Tax fee for Amex is 1.87%. Here’s a more detailed T&C from them during the billing step that specifies all Amex cards:

“The fee amount will be a flat rate of \$2.79 for debit or ATM/Debit transactions and 1.87% (minimum of \$2.79) of the tax liability payment amount for Visa, Mastercard, Discover personal cards and American Express personal and business cards or BillMeLater. The fee will be 2.29% (minimum of \$2.79) of the tax liability payment amount for Visa, MasterCard, Discover business cards.”

2. Hi. On the TopCashBack site there is a merchant note that states “Please note; there is a limit of \$500 per gift card, anything higher will not be eligible for cashback.” Does this mean that TopCashBack is not paying cashback for values above \$500? Were you successful in getting the \$269.46 from TopCashBack? Thanks!

Pat

• Hi Pat,
Yes, I saw that in the notes too. However, they did pay me the full amount. If you want to be sure, you could just purchases multiple \$500 cards (but then you’d have to pay the activation fee for each one).

3. One major flaw with this plan – the payUSAtax website only lets a taxpayer post 2 annual payments per type. Wish I had known that before I went this route. I got 10x\$500 Amex gift cards from Topcashback.com (the \$150 rebates are pending but haven’t been confirmed yet). I figured I’d better play it safe and stick to their \$500 card limit. I tried a test payment when I got the cards and it worked like a charm, but I went back tonight to pay the balance and it stopped after my 2nd payment entry.

I’m going to see if I can post a few more using a different “tax type” (maybe I can post a late 2013 Q4 payment, or try the spouse SSN instead of the primary). Otherwise, I’ll get out the checkbook and use these gift cards for something else.

I thought I read all of the fine print, but I missed this detail! At least I earned close to 5% (3% from Topcashback.com and 2% on Barclays Arrival card, less fees, shipping, etc).

Michelle

• Hi Michelle,
Ugh. Don’t you hate it when you get caught up trying to play by the rules!

I’ve had this happen before. The good news is that each processor allows 2 payments. Here’s a list of the other processors you can use: http://www.irs.gov/uac/Pay-Tax.....Debit-Card

Their fees are a little higher than PayUSAtax, so it will cut into your profits a bit, but you should still come out ahead (calculate it first, just to make sure!)

I’ve used OfficialPayments before without any problems.

Good luck and let us know how it goes.