How to handle Credit Card offer credits on LLC taxes?

[JamesInGA]

I had some expensable charges on a business credit card that were expensed to the company I was contracted to.  In this case, it was a charge for Hilton Hotels.  Shortly afterward, the credit card company credited $50 to my account for using the card at a Hilton property.  How do I treat that line item? I was already reimbursed the full amount by the company and it's not income.  Any suggestions on how to account for that?

[ThomasM125]

What you describe would be taxable income. Income is anything that results in monetary gain to you, and the credit would represent that. All monetary gain is taxable unless specifically exempted by tax law. You should report the income on your tax return as Other Income as follows:

1. Choose the Federal option on your left menu bar
2. Choose Wages & Income
3. Find Less Common Income
4. Choose Miscellaneous Income, 1099-A, 1099-C
5. Choose Other reportable income
6. Answer Yes to the question Any Other Taxable Income?
7. Enter a description and amount of the income

[JamesInGA]

That is contrary to everything I've found and read though.

- "You will not be required to pay tax on the cash value of rewards that were considered rebates."

- "No, credit card cash-back rewards are not taxable. The IRS treats cash-back rewards as a rebate on spending and not as income, so you aren’t required to pay income tax on these rewards."

Basically, any credit card rebate that required a purchase to earn is not taxed.

[ThomasM125]

Yes, but that is not what happend here. You didn't spend anything to get the rebate, since you were reimbursed for the expenses by your employer. If you gave the rebate to your employer, they would not have to pay taxes on it as it was a reduction of the cost of the lodgeing expenses. But you never expended anything since you were reimbursed for your lodging expenses. In other words, if you had paid the lodging bill of lets say $100, then you got a $25 rebate, you are still out $75. But in your case, you are out nothing but are walking away with $50.

[JamesInGA]

Thank you!  When it inevitably happens with an expense I don't get reimbursed for, what is it classified as?  These are really messing with my balance sheet :(

[ThomasM125]

You would use the credit to reduce the expense it was associated with. For instance, for a motel fee you would charge it to Travel, lets say for $100. When you get the credit card rebate, you credit the Travel Expense, so it ends up being $75.