Latest responses to “Are Credit Card Rewards and Cash Rebates Considered Taxable Income?” Copyright 2013, MoneyBlueBook.com 400320 2010-02-08T14:26:52-08:00 Arby what about bank promotions? I signed up for a bank account and received $100 from them. I then got a 1099-INT form from the bank stating that I now have to report the $100 as interest - and the IRS took out $15 off of my refund because of it. I've received actual gifts from banks and there value doesn't get reported, so why is this any different? Also, according to what Interest Income is coming from a bank, it is bonds, savings account interest, etc NOT promotional, incentive gifts. Is the bank wrong in telling the govt I earned $100 in interest that I need to be taxed on if it was a promotional gift? Why would cash need to be reported but not actual gifts? 400340 2010-01-17T15:07:01-08:00 Melinda To Rick, The amount the IRS is stated you purportedly earned can be removed, if you let the IRS know that you did not receive that in income, but it was debt reduction/elimination. Use Form 982 OMB No: 1545-0046 "Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjusment)". [You should have seen my face, when, after a foreclosure and bankruptcy, they told me I owed like 400K!! because the bank 'forgave'.] Note: You MIGHT need to amend your Federal and State Tax Forms for the year, however, traditionally I would not think so to just add this form. If you don't know how to do this, check in your local area for free tax help...it should be readily available now. Form 982 is self explanatory and relatively easy. Good luck. 400350 2009-12-29T18:14:47-08:00 Gabriel I work for a mid-size company with about 350 employees. This company utilizes a credit card to pay most of its vendors and earns a substantial amount of reward points (about 1M to 2M a month), this turns into about $200K to 300K annually in various types of rewards points which the owner of the company utilizes for person reason and does not declare on his taxes. After reviewing company financials I noticed for the last decade over 2.5M in revenue has been made with the these points but not taxes have been paid on them. Please note the cards are given out to employees at times but mostly utilized by the company owner. Are taxes due on these reward points? 400330 2009-10-09T13:31:10-07:00 Andrew Choi @raymond i want to clarify that CITI doesn't have 5% cash back, rather they offer 5 points on certain purchases. the redemption rate for citi thank you points is not uniform and closer to a maximum of 140points to every dollar. at this rate the cash back rate would be ~3.6% Personally, I find their redemption rates confusing and prefer cards with no points involved. 400310 2009-10-03T13:48:10-07:00 Raymond Hi John, well the "best credit card" offering the best rewards is relative and depends on what you wish to accomplish. Personally, I really like the Citibank Forward Card as it offers 5% cash back rebates at all restaurants, eateries, coffee shops, book stores, movie theaters, etc. But then, eating out is a major monthly expense for me. It's a Mastercard that's accepted everywhere. 400240 2009-10-03T13:36:00-07:00 John Does anyone know what is the best credit card with 5% cash back on it & no annual fees? Maybe anyone who knows someone who has it already so they can share the pros and cons? I see Discover pop up in the list when I google it, but not sure of this card is widely accepted in most stores (just as AMEX has some stores not accepting it) thank you! 400210 2009-05-30T12:08:13-07:00 Diana Savings, MM and CD's. So my question to Raymond or anyone knowlegeable is: 1. How do you ensure you will NOT pay taxes on the interest made on these vehicles when you OPEN and ONLY deposit REBATES into these accounts? 2. Can you notify and contract with the financial institution for this account to be TAX EXEMPT? 400290 2009-05-22T15:05:36-07:00 Rick "has any one ever heard of this ? i left my Macys credit card go 7 years a go and i guess the bank that offered the card payed them off and the irs is now charging me 214.00 for income that i didn't file on my income tax this year the pay off was ABOUT 2200" Yep http://www.irs.gov/publications/p525/ar02.html Look under: "Miscellaneous Income" "Cancelled Debts" You're going to be seeing a LOT of this in future... 400230 2009-05-21T16:35:34-07:00 D.Graham has any one ever heard of this ? i left my macys credit card go 7 years a go and i guess the bank that offered the card payed them off and the irs is now charging me 214.00 for income that i didn't file on my income tax this year the pay off waS ABOUT 2200 400220 2009-05-20T15:29:54-07:00 Rick We are putting together a Rewards Program whereby participants earn "Points" which are then "Translated" into dollars we load onto a co-branded Visa "pre-paid" gift card. Is there a taxable moment when this card is used? If so, would we be required to issue a 1099 to these cardholders or simply make the cardholders aware that there are tax implications in the use of the cards in the "Terms & Condiitons" of the program? Many thanks ! This is really a gray area, isn't it ?