ADVERTISER DISCLOSURE: The Frugal Tourist is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit to learn more. Additionally, the content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

One of the fastest methods to accumulate travel miles and points is to purchase gift cards (Visa Gift Cards or Mastercard Gift Cards) when they go on sale, either at office supply stores or grocery stores.

Whenever these promotions occur, it is possible to rack up several thousand travel points depending on the volume of cards you buy and the number of times you swing by these establishments.

This points-earning strategy involves using credit cards that generate spending bonuses at these aforementioned merchants.

Later on, I will list out my recommended credit cards that earn bonus points when you use them at office supply stores such as Staples or Office Depot or at groceries.

Three IRS Payment Processors

The Internal Revenue Services (IRS) has approved three payment processors to accept and process online tax payments.

Each payment processor accepts a maximum of 2 payments each quarter, which means we can send a total of 6 tax payments using gift cards every quarter (3 IRS payment processors X 2 payments per quarter = 6 payments using gift cards).

  • ACI Payments/Official Payments

  • Pay1040

  • PayUSATax
  • If you do this yearly, you can potentially send up to a total of 24 gift card payments to the IRS (6 gift cards each quarter X 4 quarters = 24 gift card payments). Undoubtedly, this is a remarkable avenue to convert those gift cards to cash.

    IRS Payment ProcessorNumber of Payments Accepted Each Quater
    ACI Payments/Official Payments2

    2023 Update: PayUSAtax has reduced their debit card fees from $2.55 to $2.20.

    Strategy: Use Gift Cards To Pay Estimated Taxes

    Whether you are new to the hobby or a seasoned points enthusiast, the constant challenge is to determine effective ways by which you can effectively convert these gift cards into cash.

    In this blog post, I will go over the steps on how you can utilize these gift cards to pay taxes, specifically estimated taxes.

    The IRS encourages taxpayers to send money quarterly to avoid getting penalized for “underpaying” their taxes. These payments are called “Estimated Taxes”.

    If you have a history of paying tax bills on April 15th, then the strategy I will cover in this post may be a viable alternative to significantly reduce or even eliminate your tax liability come tax season.

    With this approach, you will be using Visa Gift Cards (VGCs) or Mastercard Gift Cards (MCs) to pay your estimated taxes 4X/year, therefore, chipping away some of your tax liabilities once taxes are due.

    Since these gift cards were purchased using credit cards that earn travel points and miles, the rewards you accrue from these transactions can be ultimately redeemed for free or discounted travel in the future.

    If you find yourself still owing the IRS on April 15th despite sending estimated taxes, I suggest using your remaining gift cards to settle what you owe. Frankly, I am not certain until when the IRS will accept gift cards, so I try to maximize this option as much as I can.

    Summary of Steps


    Buy discounted gift cards from office supply stores and groceries using credit cards that offer category bonuses.

    Occasionally, online gift card merchants, such as, also offer discounted gift cards so make sure you take advantage of those as well.

    I post these deals as I learn about them in our Travel Miles & Points Facebook Group. It is free to join.

    Join Our Free Travel Miles & Points Facebook Group


    Use these gift cards (Visa Gift Cards or Mastercard Gift Cards) to pay your estimated taxes. Since you’ve already accrued travel points when you purchased these gift cards, you are indirectly earning miles and points from settling your tax payments.

    Note: Aside from Estimated Taxes, I have also used gift cards to pay for my state taxes, payroll taxes, and LLC taxes.


    Since these gift cards are considered “debit cards,” the fees you will incur are relatively lower compared to when you use a credit card, thus saving some cash.

    Heads Up: While the fees do not cost more than a few dollars, this payment option may not work for people who are naturally averse to paying extra charges, regardless of the amount.

    This Strategy May Work If You….

    1. Currently have a stack of Visa Gift Cards (VGCs) and Mastercard Gift Cards (MCGC) at home and you are running out of ideas on how to properly spend them.
    2. Have enough funds to pay off your credit card bills completely on or before the due date so you are able to stockpile these gift cards without paying exorbitant credit card fees.
    3. Constantly owe the IRS at tax time and you are open to spreading out your payments throughout the year by sending estimated taxes quarterly.
    4. Do not mind shelling out the small fee involved in using debit cards for estimated tax payments.

    This Strategy May Not Work For You If….

    1. The IRS usually owes you a refund at tax time.
    2. You run the risk of not paying off your credit card bills on time, thus hindering your capacity to buy these gift cards in bulk.
    3. You are opposed to the likelihood of overpaying the IRS, even though the IRS will refund any overpayments.

    Step by Step Guide on How to Use Gift Cards to Pay Estimated Taxes

    STEP 1:

    As mentioned above, the IRS has approved 3 online payment processors that taxpayers can utilize to send tax payments electronically using a debit card or a credit card. Current fees for each processor are posted on the IRS website. However, fees change periodically so click the button below for the most recent update.


    The IRS website also lists additional information for some frequently asked questions:

    • The card service fee does not go to the IRS.
    • There is no need to send in a payment voucher if you pay by debit or credit card.
    • Card processing fees are not tax-deductible unless it is associated with business taxes.
    • Do not contact the IRS if you want to cancel a card payment, contact the processor instead.
    • IRS will issue a refund of any overpayment unless you owe the IRS money.

    The image below illustrates the amount of money you can potentially save by using gift cards (debit cards) instead of credit cards when paying taxes.


    For example, if you pay $10,000 worth of taxes using a debit card on, you will only be charged a flat rate of $2.20 per gift card. Conversely, if you choose to use a credit card, you will owe a staggering $185.00 when paying the same tax amount.

    Strategy: Buy gift cards using credit cards that give spending bonuses and use those gift cards to pay for estimated taxes to avoid the hefty credit card fees when using these IRS-approved payment processors.

    Pro-Tip: Do not use an American Express Credit Card to purchase gift cards, especially when meeting a new card’s minimum spend requirement as it is against their terms and conditions.

    STEP 2:

    Since VGCs and MCGCs are considered debit cards, I typically select Official Payments/ACI Payments as my first choice, as they charge the lowest fee among the three IRS payment processors.

    Currently, ACI/Official Payments charges $2.20 for tax payments of no more than $10,000 (as of January 2023) when using a debit card or gift card.

    Have a $1000 gift card? Send them to the IRS and only pay the flat fee of $2.20 when you pay through Official Payments/ACI Payments.

    The table below illustrates the amount of taxes you’ll be paying minus the fee when using Official Payments/ACI Payments.

    Gift Card Amount Tax AmountFee
    ACI/Official Payments

    STEP 3:

    Create a profile with ACI Payments / Official Payments so your data is saved. This expedites the process when you make future payments.

    They also keep receipts of all of your previous transactions. Select the type of bill you want to pay – whether federal, state, or local.

    I noticed that it is also possible to pay education-related expenses, although not all universities are listed. Nevertheless, the list is quite comprehensive, so double-check that you are paying the correct “tax” category.

    STEP 4:

    Navigate through the website until you are required to indicate the specific type of tax bill you want to pay. If you are paying Federal Estimated Taxes, click Federal IRS Payments. You will then be directed to ACI Payment’s Federal Payment Site.

    Next, select “Personal Tax Payments” and then “Form 1040 Series.” Choose the type of tax you intend to pay. Select “Estimated Tax- (tax year)” if you would like to send advanced payments to the IRS each quarter. Don’t forget to check out the other potential tax bills you can pay with gift cards as there are multiple options.

    STEP 5:

    Fill out the necessary information such as Payment Amount and Payment Option. Make sure to manually deduct the debit card fee. Pay close attention to the amount you’re subtracting as the debit card fee varies across payment processors.

    In the scenario below, I had to deduct the $2.20 debit card flat fee from the total value of my $200 gift card since I was using ACI Payments. Therefore, I typed $197.80 to completely drain my gift card.

    This crucial step is important to be carried out correctly; otherwise, your payment will either not go through since the payment amount exceeds the total value of your gift card or you will have extra change remaining on your cards. The goal is to entirely wipe out the value of your gift cards. Every penny counts.

    The table below summarizes the amount of taxes (minus the fees) that you can pay with various gift card denominations for each processor.

    Gift Card ValueACI Payments
    ($2.20 fee)
    ($2.20 fee)
    ($2.50 fee)

    STEP 6:

    Proceed to the next payment steps. In the image below, notice that Official Payment/ACI only charged me $2.20 because it automatically detected that I was using a debit card to pay. Again, gift cards are processed the same way as debit cards, therefore the service fees are considerably cheaper.

    STEP 7:

    Next, you will be asked to review the information before submission. Once you have verified that all the information is correct, click pay.

    STEP 8

    Afterward, you will receive confirmation that your payment has been successfully processed.

    Note: These gift cards may be used even if they haven’t been registered online. I keep all of my tax receipts and upload them to Google Drive after paying. You can also print out the receipts and attach the gift cards to them for documentation purposes. Finally, I take note of all of my payments in a spreadsheet so that I know how much estimated taxes I have sent out to the IRS for the year.

    STEP 9: (ACI Payments) will allow a maximum of 2 payments each quarter. Should you need to liquidate more than 2 gift cards, you can then either utilize ($2.20 fee) or ($2.50 fee). Both processors will also allow a maximum of 2 payments each per quarter.

    In short, anyone can send 6 separate gift card payments to the IRS each quarter!

    Possible Issue on is reading Mastercard Gift Cards as credit cards so the fees are showing up as higher. Using a Visa Gift card on works. However, they will only allow one payment of the same amount to go through. A way to get around this roadblock is to change the amount of the second gift card by one cent. In my case, I was able to successfully use 2 $200 VGCs by paying $197.45 and $197.44 respectively.

    Pro-Tip: Don’t worry about overpaying, the IRS will send you a refund in the event that you do.

    STEP 10:

    Set up an alarm to remind you of the quarterly due dates of future estimated taxes.

    Payment PeriodDue Date
    1st Quarter: January 1 – March 31April 15th
    2nd Quarter: April 1 – June 30June 15th
    3rd Quarter: July 1 – September 30September 15th
    4th Quarter: October 1 – December 31January 15th
    As per IRS: If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that’s not a Saturday, Sunday, or legal holiday.


    Step 1: Click Make a Payment on

    Step 2: Select the correct form and type in the correct amount

    • Tax Category
    • Tax Form: I chose Form 1040-ES Estimated Taxes
    • Tax Form Option: I selected Estimated Tax-2023
    • Tax Year: 2023
    • Payment Amount: Make sure to deduct the debit card fee of $2.50 from the gift card value. In my case, I liquidated a $250 gift card, so I typed in $247.50 as the payment amount.
    • Filing Location: Within the US

    Step 3: Confirm that all the amounts are correct

    Since my gift card has a total value of $250, I made sure that the Pay1040 debit card fee of $2.50 was subtracted from it. This way, I will not have any money left on the gift card since my goal is to completely liquidate the gift card in one fell swoop.

    Step 4: Print out or save a PDF file in Google Drive for bookkeeping

    To organize my receipts, I upload them in Google Drive labeled “2022 Fed Estimated Taxes” so it is easier to locate them come tax time.

    Step 1: Select the type of payment you would like to send to the IRS

    In the image below, you can see that I selected to pay my Estimated Taxes for the year (Form 1040-ES). I can also use this service to pay my current tax returns as well as prior tax returns.

    Step 2: Enter Payment Details

    Since charges a flat rate of $2.20 when using debit cards, I deducted that amount from the total value of the gift card I was liquidating.

    Because I had a $250 gift card, I typed in $247.80 as my payment amount. This ensures that I completely redeem the entire amount on my gift card.

    Step 3: Review the Information and Proceed with the Payment

    I save the receipt on my google drive for easy access during tax time. I also enter the amount on a spreadsheet so I can track the total amount of estimated taxes I had sent to the IRS for the year.

    Recommended Credit Cards When Buying Gift Cards

    Office Supply Stores

    Chase Business Ink Cash® Credit Card (5X at Office Supply Stores)

    The no-annual-fee Chase Business Ink Cash® Credit Card is unbeatable in this arena as it generates 5 Chase Ultimate Rewards Points for every dollar spent at office supply stores.


    Currently, the Chase Business Ink Cash® Credit Card is giving an all-time high sign-up bonus of 75,000 Chase Ultimate Rewards points ($750 cash) after spending $7,500 in 3 months. Not only does this card give 5 points per dollar at office supply stores, but it also earns 5X per dollar on internet, cable, and phone charges. You can learn more about how to apply for this lucrative offer here.

    Chase Business Ink Cash® Credit Card

    *Intro Offer: Earn $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.
    *No annual fee
    *Earns 5% cashback on the first $25,000 spent in combined purchases at office supply stores and on internet, cable, and phone services per cardmember year.
    *Earns 2% cashback on the first $25,000 spent in combined purchases at gas stations and restaurants within the cardmember year.
    *Earns unlimited 1% cashback on all other card purchases.

    U.S. Bank Business Triple Cash Rewards World Elite™ Mastercard (3X at Office Supply Stores)

    • Earns 3% cashback on eligible purchases at gas stations, office supply stores, cell phone service providers, and restaurants.

    • Earns 1% cashback on all other eligible purchases.

    • Comes with an annual $100 statement credit for recurring software subscription expenses such as FreshBooks or QuickBooks.
    • No annual fee.

    • Learn more on how to apply for this U.S. Bank Credit Card here.

    UnitedSM Business Card (2X at Office Supply Stores)

    • Intro Offer: Earn 75,000 bonus miles after you spend $5,000 on purchases in the first 3 months you account is open.

    • Earn 2x rewards miles for each dollar spent on United tickets and select United purchases (such as in-flight food and entertainment).

    • Earn 2x rewards miles for restaurant purchases — including delivery services like Grubhub and DoorDash.

    • Earn 2x when purchasing at office supplies, gas stations and local commuting will earn the 2x miles per dollar as well.

    • Earn 1 mile per dollar for all other purchases. 
    • Receive 5,000 miles every year on your card anniversary if you also own a United personal credit card.

    • $99 annual fee ($0 introductory annual fee for the first year)

    • Learn more on how to apply for the United Business Credit Card here.

    Grocery Stores

    Grocery stores such as Safeway, Albertsons, etc. frequently offer generous coupons that wipe out the gift cards’ expensive activation fees.

    In order to maximize grocery purchases, you would also need to utilize a credit card that gives a grocery bonus.

    Cards like the Citi Premier are the best credit cards to use when purchasing gift cards at grocery stores.

    Citi Premier® Card

    • Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening.

    • Earn 3 Points per $1 spent at Restaurants and Supermarkets

    • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels

    • Earn 1 Point per $1 spent on all other purchases

    • No expiration and no limit to the amount of points you can earn with this card.

    • No Foreign Transaction Fees on purchases

    • $95 annual fee

    • Learn More About the Citi Premier here.

    Even though the American Express® Gold Card earns 4X at grocery stores, I do not suggest that you use it when buying multiple gift cards at grocery stores as AMEX is known to claw back points accumulated from gift card purchases.

    Read If You Plan To Use a Chase Credit Card

    In this bonus section, I will calculate the monetary value of the points obtained from purchasing gift cards when using a no-annual-fee Chase card like the Chase Business Ink Cash® Credit Card or the Chase Freedom Flex® Credit Card.

    At the bare minimum, each point will have a valuation of 1 cent per point if withdrawn as cash. See the table below for the cashback equivalent.

    Gift Card Amount RedeemedPoints Earned (5X multiplier)Cashback Value
    $100500 points$5
    $2001000 points$10
    $5002500 points$25
    $10005000 points$50

    At face value, these 1-cent per point rewards do not appear to be incredibly lucrative. But, if you also own one of Chase’s premium cards namely the Chase Sapphire Preferred® Credit Card, Chase Sapphire Reserve® Credit Card, and the Chase Ink Preferred® Credit Card, several other redemption alternatives spring up. By the way, these credit cards are considered premium because they charge an annual fee.

    Once your points are transferred from a no-annual-fee Chase card to a premium Chase card, then other options that have a value of over 1 cent per point become available. Therefore, I make sure to transfer all of my Chase points to a premium card before redeeming.

    Convert Cash back points to Chase travel points

    In fact, it is not uncommon to extract at least 2 cents per point if you just thoroughly explore your choices. Case in point, I stayed in Ventana Big Sur just from the points accrued from the gift cards I had used to pay estimated taxes over the years. Each night at this aspirational property costs at least $1,500! Yet, it only requires 40,000 Chase Ultimate Rewards Points that were transferred to the World of Hyatt in order to book this incredible redemption.


    Deep Dive: Transferring Chase Points Between Accounts

    As mentioned above, you need to be familiar with the process of moving your no-annual-fee Chase cashback points to one of Chase’s premium cards, in order to convert them into transferable travel points.

    Again, since premium cards charge annual fees, they provide cardmembers additional perks such as having the ability to transfer the points to travel partners, for free flights and hotel stays.

    With my Ventana example, I transferred my no-annual-fee Ink Business Cash® Credit Card points to my Chase Sapphire Reserve® account, which is a premium card.

    Then I transferred my points to the World of Hyatt, which gave me access to free stays in luxurious properties I could not otherwise afford.

    It goes without saying that purchasing these gift cards repeatedly over time will produce an enormous sum of points. You will find yourself booking a splendid vacation somewhere far away, for free or at a significant discount, in no time.

    The goal is to charge your purchases on credit cards that generate at least 5 points per dollar, thereby allowing anyone to rack up a sizeable stash of travel points when these gift cards go on sale.

    $1000 Gift Cards At Simon Malls

    Do you tend to owe a lot of taxes come tax season? Simon Malls sell $1000 gift cards that you can use to pay estimated taxes. As previously mentioned, using a gift card essentially avoids hefty credit card fees as gift cards are considered by these IRS payment processors as debit cards.

    Therefore, it is recommended to use a new credit card with a generous sign-up bonus to purchase these gift cards at Simon Malls and then use those Simon Mall gift cards to pay for your Estimated Taxes.

    However, this only works for certain banks. Do not ever use an American Express credit card when carrying out this strategy as purchasing gift cards to meet minimum spending requirements, particularly at Simon Malls, is against their terms and conditions.

    Saving More Cash

    If you have a new non-Amex credit card that you need to meet the minimum spending requirement for, a recommended strategy is to purchase these gift cards when they go on sale at office supply stores, groceries, or at Simon Mall. Then, use these gift cards to pay for estimated taxes or any type of organic spending.

    $1000 Estimated TaxesOfficial PaymentsPayUSAtaxPay1040
    Credit Card Fees$19.80$19.60$18.70
    Debit Card Fees$2.20$2.20$2.50
    Gift Card Fees$2.20$2.20$2.50

    Final Thoughts

    I am a huge fan of gift card promotions, and I try to take advantage of them every opportunity I have. However, a gentle reminder, though, to only purchase the number of gift cards that you can comfortably pay once your credit card statement comes around.

    A common dilemma that points enthusiasts face is determining sensible ways to spend these gift cards, as options have significantly dwindled in the past few years. I hope that the strategy I outlined in this blog post opens up another pathway for you to liquidate these gift cards into money.

    Above all, I relish the notion that I am able to get a free flight or hotel stay from paying taxes as it somehow softens the blow of this financial burden. Please let me know in the comments section if you were able to successfully carry out this strategy too.

    EDITORIAL DISCLOSURE – Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. The content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.