Are gains from cashback cards taxable in 2015?

Anonymous · ‎01-21-2016

I know that rewards from opening bank accounts are taxable. Are gains from cashback cards taxable in 2015? Is the credit card sign-up bonus taxable in 2015?

Anonymous · ‎01-21-2016

LOL

This is seriously overthinking it, man!

takeshi74 · ‎01-21-2016

Ask your CPA.

Mattopotamus · ‎01-21-2016

That really is a good question and something I never even considered

Dalmus · ‎01-21-2016

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.

Current FICO 8 Scores: EQ: 828| TU: 805 | EX: 814

Anonymous · ‎01-21-2016

@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.

Anonymous · ‎01-21-2016

Dalmus, thanks for such a great post (+1 kudo from me). I know that it was like this in 2014. Just need a confirmation for 2015. Thanks again.

Anonymous · ‎01-21-2016

I think it's worth restating that personal cards and business cards are different. Lots of people here have "business" cards, although it often seems like they don't have a business. Those rewards are likely taxable (but consult a CPA). Person cards though are tax free. Congress isn't going to change that. Imagine how many people would be up in arms if they suddenly got 1099s from their credit card company.

longtimelurker · ‎01-21-2016

@Anonymous wrote:
Dalmus, thanks for such a great post (+1 kudo from me). I know that it was like this in 2014. Just need a confirmation for 2015. Thanks again.

Right, from time to time there are rumblings that the IRS is considering changing the interpretation, but so far, it hasn't been changed.

For some things, it seems a fairly arbitrary distinction, especially when using a cashback portal (Here's 5% for going through us so we can get 10% sounds like it should be income if you did it for a person rather than for a website!)

Anonymous · ‎01-21-2016

Citi has been known to send out 1099s for some bonuses.