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Cash rewards earned on your personal bank or credit cards are considered as discounts on your purchases and not income. They are not taxable and you do not enter them on your tax return.
Hello most of the info i see echos this- not taxable income.
But, because as you say they are discounts to purchases, it is suggested that - at least in schedule C scenario - you must reduce your expenses (quite literally discounting your purchases) by the amount of rewards received. Do you disagree with this and can you cite any official guidance on it?
thanks
I got a 1099 Misc for my credit card cash back rewards. I think the portion that gets categorized as extra rewards when I deposit the cash in a TD bank account. Regardless, turbo tax keeps trying to make it a business but that is not correct. How do i correctly enter it
Yes, you are correct this should not be business income. First, you should delete any 1099-Misc already started and associated with a business. Use the steps below in online versions. If working in a desktop versions use the "Forms Mode" to delete forms.
1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-Misc
5. "Delete"
6. "Confirm Deletion"
Next, in the "Other Common Income" dropdown menu select the "1099-Misc" topic. After entering the form information select either "Prize and Award" or "None of these Apply" option.
If you select "None Apply" then answer "it was not like your main job," you received in "2022" and there was "not an intent to earn money." Either of these choices puts the income on Schedule 1, line 8. It could be 8i or 8z, either way it will not be business income and not be subject to self-employment taxes.
To view the forms and see to entries use the steps below in online versions. In desktop versions use the "Forms Mode" to view the forms.
1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu
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