
Credit card rewards are very valuable, but does that mean you have to pay taxes on them? If you did, how would each mile or point be valued? These are the questions that some people have every year when it comes time to submit their income to the IRS. Interest is also peaked by stories like this one in the Los Angeles Times that reveal that Citibank has been sending out 1099-INT forms to some of its savings and checking account customers who received American Airlines miles. In response, many people are concerned that their credit card rewards in the form of cash back, miles, and points may be taxable.
Cash Back
The IRS has always considered cash back rewards from a credit card to be a discount on the purchase price of goods and services. They view these rewards much like a coupon where the original price is marked down, and a lower price is paid. In all of those instances, the value of the discount is not reported as taxable income. Continue Reading »






Those who pay their credit card balances on time and in full each month should be using a rewards credit card. Although many cardholders enjoy their rewards in the form of loyalty points such as frequent flier miles, cash back remains the most popular type of rewards card.


