So does Uncle Sam want a cut?
In most cases, the IRS treats credit card rewards as a rebate, which isn’t taxable.
However, there are situations where rewards might be regarded as taxable income.
Are credit card rewards taxable?
“Many rewards are considered discounts instead of income, making them nontaxable.”
But the rules change when you receive a reward not attached to a spending requirement.
The same applies to referral bonuses.
Some issuers reward cardholders for inviting their friends or family members to apply for a card.
Do card issuers send 1099s for taxable rewards?
If you earn taxable credit card rewards or cash back, you may receivea 1099-MISC formwith your tax return.
A 1099 is an official IRS form that reports a business paid a nonemployee for miscellaneous compensation.
In this case, your credit card company would be the business and you’d be the nonemployee.
The IRS requires a 1099 form when income exceeds $600 or more.
How do I know if I owe taxes on credit card rewards?
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