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Don’t Pay Taxes with American Express Points

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American Express announced today that you could pay your tax bill using Membership Reward points. For every 200 points, you could pay $1 in taxes through Pay1040.com or OfficialPayments.com. You’d be assessed transaction fee but you could pay for that fee with points as well.

While it may sound appealing, 200 points for every $1 values each point at half a cent each. If you remember from my review of the American Express Membership Rewards program, half a cent per point is remarkably low. While there is no cash option for AMEX points, their recent “everyday expenses” program lets you pay everyday expenses using points that value them at 0.60¢ per point.

Official Payments charges a 2.35% fee for federal tax payments with a credit card, with a minimum of $3.95. Debit cards are charged a flat $3.95 fee.

I think this is mostly a PR move, considering the conversion rate is so low, but if you were contemplating this, consider another option.

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9 Responses to “Don’t Pay Taxes with American Express Points”

  1. Thanks for the good advice. Someone will do it anyway, though.

    John DeFlumeri Jr

  2. eric says:

    yeah does not make much financial sense…

  3. Glenn Lasher says:

    Someone backed into the debt corner, no doubt, will be the one to do this . . . someone with more points than cash.

  4. zapeta says:

    I’m guessing they’re just putting the option out there…if they can get some people to cash in at a low rate instead of $0.60 a point or higher they come out ahead.

    Every time I see one of these special redemption offers pop up I assume they are just trying to get the public to redeem their points for a greatly reduced rate.

    • jsbrendog says:

      like when i was shopping for a dvd player as a gift. on my cc rewards site i couldve gotten ti for “free” but it was the equivalent of $65 in rewards points whereas i got it new for $50 out in the real world.

      i’ll take cash check for my rewards thank you very much

  5. jsbrendog says:

    mind boggling. somewhere, someone is going, AWESOME!

  6. Kenneth Lin says:

    Personally, I think the best way to use MR points are for Business or First Class travel awards. You can fly just about anywhere in the world first class for 120,000 miles. If you assume an average ticket value of $6,000, that is 5 cents per mile. I guess you may balk at the notion of 120,000 points but even if you only value it at 1 cent per mile you can still fly anywhere in the world for $1,200 in points, first class. Pretty good deal in my opinion.

  7. David says:

    Yea, bad idea to use those points to pay taxes with. However, I do use Official Payments every quarter to pay my estimated taxes using my rewards credit card. After doing the math, the fee they charge is worth exchanging for the rewards points I get back.

  8. A Khan says:

    I agree paying with points does not make any sense. I am paying with my card to get points and bump up my bracket to a higher category on my HH AmEx card as I am Gold Member at the moment. This website has even a lower rate of 2.29% than others for Credits cards including AmEx. Check it out.
    https://valuetaxpayment.com/SelectService.aspx


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