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@Anonymous wrote:
@Dalmus wrote:With the nature of our government, I don't blame you for wondering!
BUT... For personal credit cards, the IRS considers cash back rewards as a discount on a purchase price, and is not taxable as income.
Same with airline miles... Miles earned from purchases are not income. However, miles awards as a BONUS for opening an account are technically income.
If its a business card used for business purchases, consult your CPA. Business taxes are crazy cans of worms.
Bottom line for personal cards... If you don't get a 1099, don't worry about it.
Great post. Actually this is how I've always thought of rewards recently. I'm not getting 10% income by using my Discover It (double cashback) this month. I'm getting a 10% discount on gas purchases. When I was younger sometimes I bought stuff I shouldn't "chasing" rewards. Now I view it as just getting a nice discount on a purchase and don't buy stuff I wouldn't normally buy to get a small reward.
Bottom line you nailed it, great post.
Exactly. I buy tons of stuff I normally wouldn't buy. Adding a small reward doesn't even factor into it at all!
@Anonymous wrote:
It's more like a discount. Don't over think it
Yes, it currently acts like a discount for tax purposes... but checking that the situation hasn't changed is far from "over thinking it".
The current situation is the result of an administrative ruling by the IRS, and could be changed at any point...
If you want "over thinking" - check out the IRS responses to questions about the ruling, like this one: https://www.irs.gov/pub/irs-wd/1027015.pdf