Rewards and rebates are not considered taxable income and therefore are not taxable. In Globelivemedia we explain why
Banks and other financial institutions use the attractive proposal of giving you certain benefits, such as refunds and rewards for processing and using one of their credit cards. These will depend on the type of card you choose and in some cases, the rewards will be more than others. But what if these rewards and/or rebates are taxable? In Globelivemedia we tell you.
The answer to such an unknown is very simple and it is NO. In reality, no rewards or refunds given by any credit card will be subject to taxes. The reason is that the rewards of commercial credit cards are not considered as income and since they are not considered as such, they are not taxable.
It is different from when you receive income from a job, either full time or part time. In this sense, these are taxable, the rewards received by credit cards are then considered as refunds of items you bought and for which you have already paid your respective part of taxes.
In the case of those dynamics where you buy a product and then send your reimbursement form to the manufacturer to receive a check in return, you do not have to pay taxes either, since this money does not increase your income. It is considered as a prize. Those who use apps like Ibotta to get cash back for your purchases are also not taxable income and therefore you should not pay taxes on it.
According to what the Internal Revenue Service (IRS) explains, there are several issues related to the benefits of business credit cards. This means that it depends on how and when income is valued and how “personal use profits attributable to business and official expenses versus attributable personal expenses” are identified, for which there are no official guidelines.
What to say, that until now, the so-called Internal Revenue Service has not established a tax application program with respect to promotional benefits such as frequent flyer miles.
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