MemberSince99 wrote:If you are depositing money through a checking account, I would hope you aren't getting taxed on THAT money but only the profits on your way back out or you would be paying double taxes on the money deposited, which is likely going to mean no matter your rate of return you are losing money, probably a lot of it.
Not sure how that would be kept track of, but that would discourage me from putting money from my checking into that just on the notion that it could be taxed again.
If you spend $100,000 on a card and get, say, $3,000 cash back, then deposit the $3,000 to a non-retirement Fidelity account and buy $3,000 of securities, then your tax basis in those securities is $3,000. It would be the same if you wrote a check. The tax basis would technically be the same for an IRA and 529 account, but with those accounts the tax basis itself doesn't matter - just the amounts contributed and withdrawn.
Cash back is just cash. It is a rebate that counts as a reduction in the price you pay buying stuff. It is like buying $1,000 worth of stuff and having a cashier hand you $30 - there is just a little delay or a month or two involved. Maybe you could compare it to mailing in a manufacturer's rebate.
I'd rather not get into every possible tax situation a person could get into with a Roth IRA, Traditional IRA, or 529 plan. My point is that with those kinds of Fidelity accounts, the source of the cash for contributions