Paying with rewards

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I purchased office supplies at Office Depot. some wee paid with a credit/debit or gift card, some with earned rewards.

Can I claim all items or only those paid with credit/debit cards and gift cards?

Not A Product Question

KathrynG3Answer

Alumni - Intuit

This post disagrees.

https://ttlc.intuit.com/community/business-taxes/discussion/if-i-pay-for-business-supplies-using-a-gift-card-can-i-still-list-them-in-my-expenses-section/00/468342#M17753

What IRS publication/instruction can you refer me to?

If you want to take the expense, then you would have to consider the reward as other income.

Publication 334 page 27:

Trade discounts. These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Do not enter these discounts on your books of account. Instead, use only the net amount as the cost of the merchandise purchased. For more information, see Trade discounts in chapter 6.

For IRS references,

Publication 334 Tax Guide for Small Business

Publication 535 Business Expenses

DianeC958

Alumni - Intuit

You can only claim as a deduction the amount you actually paid for the item.

For example, you purchased a ream of paper that costs $12 but you have a reward you applied that reduced the cost to $10. $10 is the amount you can deduct.

Link with more information about Taking Business Tax Deductions

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Stephanie59Author

Level 3

That's not what they did.

I received a 20% discount, reducing the cost by $4. The rewards were used to pay the total. If the rewards were used as a "discount" to reduce the cost of the item, I wouldn't have been charged tax. In this instance, I see this (and they refer to it as) a gift card which IRS considers cash.

DianeC958

Alumni - Intuit

When you receive a discount or a gift card that you did not pay for it is not considered cash.

If you purchased the gift card, then when you use it is it deductible because you paid for the card. If you receive a gift card from someone else and use it for a business expense it is not deductible because you did not pay for the card.

The amount that is deductible for tax purposes is the amount that you actually paid.

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