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January 15, 2007


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I got $300 back last year too from my chase rewards card. Now I'm wondering if I should pay taxes on that money? What do you think FMF?

I had no idea, so I asked JLP at since he knows a TON more about taxes than I do. He said his book said:

“A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate.”

Then he comments:

"I realize that cash earnings from a credit card are not the same thing as a manufacturer’s rebate. However, my gut tells me that cash earnings are not taxable because it is essentially a rebate on products you have purchased with after-tax dollars. BUT, I am NOT a tax expert."

So even he's unsure. My CPA has never asked about it (and she's pretty comprehensive), so I'm leaning to "not taxable" as well.

All that said, I'd advise you to ask your tax professional before you either do or do not claim it as income.

Thanks a lot FMF

JLP just posted on this issue. Check here for his full explanation:

In addition to the JLP post, I'd add that, even in years that I earned well over $600 in cash back rewards on one card, from one company, I still didn't receive a 1099-MISC. I believe that the credit card company would have been obligated to send a 1099-MISC if the cash back reward (in excess of the $600 threshold) had been taxable.

If a business earns credit card rewards and shares said rewards with its employees in form of a bonus, would the employees become responsible for additional taxable income even though the bonus is in the form of reward points and not cash? Would these reward points be considered "not taxable"? (I asked this same question on also)

I'll let JLP answer it then -- he's the tax expert. ;-)

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