The traditional rewards points earned when making purchases with credit cards or debit cards are still tax-free. If however, you are making business purchases for your business,you have to reduce the cost of the business expense by the amount of the reward.
Taxation of rewards points hasn't been an issue before now for two reasons. First, the type of rewards considered income rarely came close to the IRS's mandatory $600 reporting threshold. Second, the type of rewards most people receive -- and hoard to redeem for big trips or merchandise -- have been earned as the result of the consumer making purchases with a credit or debit card.
Rewards that are $600 or more may be taxable if paid for opening an account at a bank.
The traditional rewards points earned when making purchases with credit cards or debit cards are still tax-free. If however, you are making business purchases for your business,you have to reduce the cost of the business expense by the amount of the reward.
Taxation of rewards points hasn't been an issue before now for two reasons. First, the type of rewards considered income rarely came close to the IRS's mandatory $600 reporting threshold. Second, the type of rewards most people receive -- and hoard to redeem for big trips or merchandise -- have been earned as the result of the consumer making purchases with a credit or debit card.
Rewards that are $600 or more may be taxable if paid for opening an account at a bank.