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Posted on 9/4/16 at 3:05 pm to AndyJ
quote:
1) are you supposed to pay taxes on points (I presume the answer is yes)
The frick I will, it's doesn't let you deduct credit card fees and interest how on earth can they tax credit card benefits??
Posted on 9/4/16 at 5:15 pm to AndyJ
quote:
Ok cool.
2 questions
1) are you supposed to pay taxes on points (I presume the answer is yes)
2) do most people actually do this? (I suspect no)
The answer is a No. You do not owe any taxes on points or cashback earned from credit cards because these are treated as rebates. You owe no taxes on rebates. Straight from an IRS officer btw.
You can't write these off as expenses either. As far as points go (not cb), another reason that it can't be taxes is because it is impossible to assign monetary value to points. You may redeem your points for 0.8c per point while I may redeem the same points for 9c.
As far as paying for business trips with points, here is a relevant article on one of the blogs I enjoy: Hacking Business Travel
ETA: Like others, my suggestion would be to just pay for your business travel in cash and save the points for leisure that you can't write off anyway. Depending on your tax bracket, this could translate to upto 25-30% off on your business trips (Tax shield). And potentially lot more on your leisure trips (subsidized through points).
This post was edited on 9/4/16 at 6:15 pm
Posted on 9/5/16 at 3:22 am to AndyJ
quote:
1) are you supposed to pay taxes on points (I presume the answer is yes)
No. Points are considered a rebate on the purchase not income. Rebates are not classified as taxable income
EDIT: Amerikop already answered but I'm keeping mine too
This post was edited on 9/5/16 at 3:24 am
Posted on 9/5/16 at 10:27 am to AndyJ
quote:
2 questions
1) are you supposed to pay taxes on points (I presume the answer is yes)
2) do most people actually do this? (I suspect no)
About 10-15 years back, the IRS busted a whole bunch of NBA refs for not reporting. They were down grading from first class to coach, and taking the cash or the equivalent in airline miles. The refs' CBA allowed them to do it, but they didn't pay the tax on it. When the IRS came calling some of the refs tried to produced fake receipts.
The judge that was presiding over the case told them, that based on the IRS evidence I would suggest that unless you can prove "diminished mental capacity" to plead guilty.
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