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Do you have to pay taxes on "cash back" money from using a Discover Card. What if you redeem the cash back as a gift card. Is it then a "gift". Confused....
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Last edited by herm4; 09-08-2007, 04:35 AM. -
No, you don't need to claim cash back money as income on your tax return. Cash back is similar to rebates, where you get part of the purchase price refunded to you. You don't earn any income that way, so there is nothing to declare. -
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Is the same true for other rewards, like air miles or hotel stays?Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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Generally card rewards are treated as non-taxable rebates or discounts on the price of merchandise purchased. Airline miles are also viewed in much the same way by the IRS; as are rebates offered on new car purchases.
The only credible issue I have seen raised regarding cash back credit card rewards:
1) If you use a card to purchase items that are deductible (i.e. - business expenses) then you receive a rebate based on those purchases, then, theoretically, you have reduced the basis (cost) of those items and that would need to be considered when calculating the business expenses deduction for your taxes.
Less complicated, perhaps, but similar is that I have read that:
2) If you obtain a free airline ticket because of miles accumulated for business travel; the expenses for which were claimed as a business expense, and then the free ticket is used for personal use, then the value of that ticket is, again theoretically, taxable. (I assume the same may hold true for 'free' hotel stays, etc.)
Ultimately, the IRS doesn't seem to have a stated position on this, even in those cases.
For most people, there simply isn't an issue with getting 'gifts', rooms, flights, or even cash back rewards from various programs. The only potential issue seems to come in when accumulating those rewards via purchases that you deduct as business expenses.
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How about people who do surveys. How do they view that even if it was unver $500.Comment
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If you make $600 or more, on any one site, it will need to be reported.Originally posted by Aleta View PostComment
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No. If you make $600 or more, the company has to report it. You, technically, need to report the income earned regardless of the amount.Originally posted by herm4 View PostSteve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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I suppose on the surveys you have to follow your conscience, because you are supposed to report them but the earnings don't get reported to the IRS unless you go over a certain amount. I joined Pinecone this year and I'm going to report my earnings; I have a list in my 2007 tax file where I make a note each time I get paid by Pinecone ($40 YTD).Comment
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great info thanks:0Comment
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poundwise and disneysteve made very good points. I have nothing more to add other than to reiterate their comments.Comment
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Do you have to pay social security on surveys or is it considered passive income?Comment
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That's a good question and I honestly don't have a clue. I max out SS taxes from my regular income so it isn't an issue for me. I'm sure someone else knows.Originally posted by Aleta View PostSteve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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Would this also open a window to deduct part of your internet usage? as you use to earn this money? It is part of your job.Originally posted by scfr View PostComment
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