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Interest earned from PenFed's Credit Card...Is it taxable?

Super Contributor

Interest earned from PenFed's Credit Card...Is it taxable?

I opened my PenFed credt card in August 2009.  I earned less than $5.00 in interest.  Can I expect to receive a 1099 INT? 
Message 1 of 16
15 REPLIES
Regular Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?

Are you referring to interest earned on a PenFed deposit account or rebates on purchases paid by a PenFed CC?

 

Interest earned on deposit accounts is taxable, but financial institutions won't issue 1099s unless the total amount paid for the year is at least $10.

 

As far as CC cash rebates are concerned, I believe that the IRS considers these to be refunds of overpayments. As such, they are not taxable income to the recipient.

Message 2 of 16
Super Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?

Thanks JimB! 
Message 3 of 16
Moderator Emeritus

Re: Interest earned from PenFed's Credit Card...Is it taxable?

With all due respect I personally wouldn't listen to any tax advice from anyone on an online forum. The IRS is the final authority on these matters and they have NO sense of humor. I would contact them to be sure.

 

Just my 2 cents.

Message 4 of 16
Moderator Emerita

Re: Interest earned from PenFed's Credit Card...Is it taxable?

fwiw, which is little or nothing as this never occurred to me, I never received a statement last year from PenFed for my cash rebates. I don't have checking or savings, so there wasn't anything to get confused with.

Good point about clarifying with the IRS, but at the same time, are regular rewards on other cards taxable? Points on American Express charge cards and so forth? I've never heard that they were (again, fwiw), and there's no difference in the PenFed rewards, IMO.

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Message 5 of 16
Senior Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?

See IRS Publication 17. The answer seems to be no the rebates are considered as lowering the purchase price of the items.
Message 6 of 16
Regular Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?


haulingthescoreup wrote:
Good point about clarifying with the IRS, but at the same time, are regular rewards on other cards taxable? Points on American Express charge cards and so forth? I've never heard that they were (again, fwiw), and there's no difference in the PenFed rewards, IMO.


I've been collecting cash rebates from Discover since I got the card in 1986, & I've never seen any indication - Form 1099s, letters from Discover, etc. - that I'm required to required to report or pay taxes on this money.
By contrast, the mutual funds & brokerage firms with which I do business bombard me with paper & e-mails, beginning in December, to keep me informed about my responsibilities to the Infernal Revenue Service. I'd have to be deaf, dumb, blind & locked in the basement not to know that I've got work to do.
 

 

Message 7 of 16
Super Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?

I checked PenFed's website for end of your tax information.  I did not earn any interest from savings.  Interest on rewards are not taxable. 
Message 8 of 16
Frequent Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?

I have been doing taxes on base for the last 4 years with training provided by the IRS in 2006 & 2007 and you don't have to claim the money earned by rewards credit cards.

 

You do have to claim any amount over $10 on any interest bearing account that is held by a bank, CU or other finanical institution.


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Message 9 of 16
Senior Contributor

Re: Interest earned from PenFed's Credit Card...Is it taxable?


rubaty wrote:

I have been doing taxes on base for the last 4 years with training provided by the IRS in 2006 & 2007 and you don't have to claim the money earned by rewards credit cards.

 

You do have to claim any amount over $10 on any interest bearing account that is held by a bank, CU or other finanical institution.


Thinking under.

Message 10 of 16