Hello, I will be assisting you. I recall reading that the IRS was looking to tax such rewords by the credit card companies were in opposition. I will have to refresh my recollection. I will need to log off and do some research. Please bear with me.
Help when you can.
I confirmed that the rewards are taxable and you should report them as misc income. In fact, if the value of those rewards is more than $600, banks and credit card companies are required to send a 1099 form to both the IRS and the rewards recipient.
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why is it an incorrect answer?
Based on a private letter opinion the IRS issued to a tax payer in 2002 many people have concluded that such income is not taxable. Some also reference IRS Publication 17, where it says that cash rebates one receives from a dealer are not taxable. However, in the case of a credit card the credit company is the one that provides the rebate not the merchant. To date the IRS has not ruled specifically that cashbacks from credit cards are not taxable income. You, as the tax payer may choose to follow what others are doing but I as an advice provider choose to follow a more cautions route.
I recognize that I should have included in my answer the fact that the status is unclear at best, that most people are not declaring such rebates as income and that my opinion was conservative.
Kindly please change your rating. Thank you.
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