Credit Card Forum
  1. #1
    tgmind
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    Default Are credit card rewards taxable?

    I have a small business and spend about 200k a year on my credit card. If I use a cash back card will I have to pay income tax on the rewards? I assume I will, and that's why i choose an airline card.
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    Reply With Quote Reply With Quote     Nov 12, 10, 3:57 am
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    Cucumber
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    I *might* be wrong but I think the IRS views credit card rewards as a rebate (not taxable income) but that could change in the future
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    Reply With Quote Reply With Quote     Nov 12, 10, 1:57 pm
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    DoingHomework
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    I think that is correct. It would not make sense to tax credit card rewards. It would open up a big can of worms since people would start deducting what they spend to earn the income (and this would be reasonably consistent with the law so it would likely end up in court rather than just being disallowed by the IRS.) It would create a back door for deducting credit card interest and fees!
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    Reply With Quote Reply With Quote     Nov 16, 10, 2:40 pm
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    jeffysdad
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    I don't think CC rewards are taxable, but as a side note I read the other day that banks that offer bonuses for opening new checking accounts are reporting that bonus money they pay you to the IRS.
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    Reply With Quote Reply With Quote     Nov 17, 10, 2:24 pm
  5. #5
    Mogul of Pineapples
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    I read the other day that banks that offer bonuses for opening new checking accounts are reporting that bonus money they pay you to the IRS.
    When I opened a BofA savings account in 2005 I was shocked to see the $50 prepaid gift card bonus was reflected on my interest statement that was reported to the IRS.

    If and when credit cards rewards become taxable you can bet we will see a shift from cash back to airline and other reward cards.
    Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed. Regardless, anything I say is my honest opinion.

    Current Cards:     American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
    Primary Everyday Card: American Express Blue Cash
    Primary Travel Card: Citi Thank You Premier
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    Reply With Quote Reply With Quote     Nov 20, 10, 2:18 pm
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    infomaniac
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    If credit card cash back is taxable then there's a mighty high number of folks who will be in trouble with the IRS. Not once have I heard of someone declaring cash back on a tax return and if it was taxable we should be receiving an interest statement at the end of the year as is done with savings account interest.
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    Reply With Quote Reply With Quote     Nov 25, 10, 8:38 am
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    Mr Chopstix
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    If credit card cash back is taxable then about 1/2 the population is cheating on the taxes. Never once have I heard that cash back should be claimed.
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    Reply With Quote Reply With Quote     Dec 11, 10, 2:43 am
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