- Centurion Member
- Posts: 3929
- Joined: Thu May 08, 2014 7:42 pm
- Location: United States
I have done a little research and here is what I have found:
If you get rewards over $600 per year just because you open an account, and are not required to make at least one purchase with that card within a limited period of time, then the rewards are taxable.
If you need to make a purchase to earn a 'signing bonus' or to receive a regular percentage of cash back, then the rewards are not taxable. They can, however, count as a reduction in cost of whatever you buy with the card. So, if you use the card to buy something for $100 you will claim as an expense on your tax return, and you get $1 worth of rewards, then you can only claim a deduction for $99.
There are a few Private Letter Rulings (things the IRS publishes that offer some guidance but are far, far less authoritative than the Internal Revenue Code) that state that if cash-equivalent points are given to a charitable organization, then the cardholder can take a charitable deduction.
Disclaimer: I am an Enrolled Agent (a federally authorized tax practitioner and taxpayer advocate) and have a reasonable knowledge of taxation. I should emphasize that I have been unable to find anything that provides a definite or comprehensive answer. I like to help but do not rely on this bit of light research if the IRS tells you your rewards are taxable.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
AA Platinum converting into Costco
Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May