Credit Cards

Are my credit card rewards taxable?

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Dear Your Business Credit,

How do I get the bank to 1099 my credit card? – Victor

Dear Victor,

It’s great that you are staying on top of record-keeping in your business. Many small business owners are so busy serving customers, they neglect to keep an eye on whether they are getting the documents they need to file their taxes – and find themselves in a mad scramble as tax deadlines approach.

When card rewards are taxable – and when they are not

If you are trying to get the bank to give you a 1099 form for cash back you received from a credit card, there is nothing you need to do. Cash back is not considered taxable income, as per a memorandum 2010 from the IRS.

If, however, the bank gave you a cash bonus for opening your credit card and you are not required to make any purchases or a set amount of charges to your card, the IRS considers that taxable income. Referral bonuses (where you get friends to sign up for a card in exchange for a cash bonus) are also taxable.

It’s important to think about the impact of any income received this way on your tax status before you go after it. If, for instance, getting a few cash bonuses might push you into a higher tax bracket, it may not be worth it to make the effort to get those bonuses (or you may have to search for untapped deductions so you can go after them).

If you do have to take an action like charging $3,000 worth of purchases on the card the first three months, then the bonus is not taxable. Similarly, regular cash back is not taxable…Read more>>

Source:-creditcards