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Hãy viết đoạn tóm tắt về nội dung bằng tiếng việt kích thích người mua: Are Your Credit Card Rewards Taxable? What to Know Before You File

Credit card rewards can be quite lucrative if you strategically use a card tailored to your spending habits. Depending on the card, you can earn cash back, airline miles, welcome bonuses, referral bonuses and more. But are credit card rewards taxable? In most cases, no — but there are exceptions.

“Credit card rewards points and cash back are generally considered a promotional benefit or rebate and are not taxable,” said David Shipper, a senior research analyst for Aite-Novarica Group, who specializes in debit, credit and prepaid card issuance. 

However, there are situations where rewards might be regarded as taxable income. We’ll break down some of the most common instances, but you should reach out to a tax consultant (or a tax software program) if you have questions about your specific circumstances.

Are credit card rewards taxable?

Here’s a general breakdown to help you see whether your credit cards rewards are taxable, then we’ll get into more of the details:

When your credit card rewards are not taxable

If you earn income, you generally have to pay taxes on it, but if you earn rewards for spending money on your credit card, you typically don’t have to pay taxes on them. Why?

“In general, the US government considers any income taxable, but there is no defined law that states what’s considered income when it comes to credit card rewards,” said Jim Pendergast, senior vice president and general manager for the altLINE division of The Southern Bank Company. “Many rewards are considered discounts instead of income, making them nontaxable.” 

So if you have to make a purchase to earn the reward, the IRS considers your credit card reward a discount or rebate. Think of it this way — if you used a credit card that let you earn 2% cash back to purchase a $1,200 laptop, the $24 you earned in cash back essentially reduced the price of the laptop to $1,176 in the eyes of the IRS. (Note: If you’re deducting said laptop as a business expense, you have to use the reduced price.)

While the rewards currency may vary depending on whether you use a cash-back, rewards or travel credit card, they all essentially work the same way: You earn rewards after you use your card on purchases. Since you have to spend to earn a return, any rewards accrued from your spending is generally considered a “rebate” and exempt from taxation.

Most credit card rewards earned by meeting a spending requirement fall under the same rule, and are not considered taxable income. If you collect $200 in cash back for spending $1,500 in the first three months from account opening, for example, that wouldn’t be considered taxable — because of the spending requirement. 

But the rules change when you receive a reward not attached to a spending requirement.

When your credit card rewards are taxable

No-strings-attached credit card offers are few and far between, but they do exist. If you earn rewards with your credit card without having to spend any money, the money you receive may be considered taxable. For example, if you receive cash or miles for simply opening an account and there’s no spending requirement to earn the reward, you may need to pay taxes on that bonus.

The same applies to referral bonuses. Some issuers reward cardholders for inviting their friends or family members to apply for a card. Every issuer has its own rules surrounding referral bonuses, but you generally receive a bonus once your referral gets approved for the card. If you receive a monetary bonus for recruiting someone who opens a card, you’d technically be required to report that as earnings on your income taxes.

However, Shipper also notes that there is a gray area. “If you redeem business card rewards for a personal vacation, then the rewards may be seen as income and could be taxable. Or if you attempt to ‘beat the system’ and purchase money orders or gift cards that are then used directly or indirectly to pay off the credit card, your rewards gains may be taxable,” he added.

Another exception: If you use your personal credit card to make purchases that are reimbursed by your employer, any cash-back rewards you earn for those purchases could be considered taxable income. In this instance, the rewards are coming back to you in the form of compensation, hence why it’s taxable.

But apparently, even the IRS gets overwhelmed trying to calculate the value of airline miles, because if you earn miles as rewards on a purchase, it’s generally not taxable even if you’re reimbursed by your employer.

Do card issuers send 1099s for taxable rewards?

If you earn taxable credit card rewards or cash back, you may receive a 1099-MISC form with 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. If you earn $600 or more in taxable rewards, you may receive a 1099 from your credit card company. If you earn less, you’ll still need to report this information on your tax return, but you may not receive a 1099 from the credit card company. 

Instead, you should review your statements for the prior year to calculate how many taxable rewards (referrals or bonuses earned without a spending requirement) you’ve earned. If you aren’t sure whether your credit card rewards are taxable, you should contact a tax consultant for further guidance. 

Pendergast and Shipper both expect the IRS to increase its scrutiny of credit card rewards in the future, so it’s a particularly good idea to double-check your status before filing your taxes.

How do I know if I owe taxes on credit card rewards?

Unless you’re collecting a serious number of referral bonuses, you likely won’t owe taxes on your credit card rewards. Again, you don’t have to pay taxes on offer rewards — whether they come as points, airline miles or cash back — as long as you earned them through spending.

If you earn a bonus from your credit card simply for signing up or referring a friend or family member, you might have to pay taxes on that income. These offers are less common, but they are out there, so make sure you keep track of any taxable rewards, so you’re prepared when tax season rolls around.

And while it’s important to understand the difference, there’s no limit to the amount of nontaxable rewards you can earn, according to Lanesha Mohip, CNET Money Expert Review Board member and personal finance expert.

“There’s no threshold for credit card rewards — just classification,” she said.

The bottom line

Earning credit card rewards typically doesn’t trigger a taxable event, because the IRS treats card rewards as a rebate, not a source of income. However, things can get more complicated if you habitually refer new cardholders, take advantage of no-strings-attached credit card offers or are reimbursed for work-related purchases you make with your personal credit card. Even if you don’t receive an official 1099 form from your issuer, you’re expected to report any taxable income received. If you’re unclear about whether your rewards are taxable, reach out to a tax expert.

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