Are Credit Card Rewards Taxable?

[@taxleverage]

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[@cgal639]

Great info. Thanks!

[@kunsangG]

wow learn something new thanks

[@Lucasbdlt]

I didn't know that IRS made the wrong argument int that case. I get the feeling that it was done on purpose though. There seems to be no incentive for the IRS to win that case and potentially have to start regulating or taxing cash back programs because companies make a business mistake.

[@soroushme]

That was perfect. No time-fillers, no beating around the bush, no nonsense. Straight to the point, concise, and covered all the important and relevant aspects to the topic. Great presentation. Thanks for the great content.

[@taxleverage]

You're welcome! Glad you enjoyed

[@debraferrara7682]

What if you haven't received the perks

[@SnipetsofTime]

For reals

[@thebigunodos3559]

This channel has the most useful tax information that is pertinent to me. Thank you for all your work in educating people on taxes!

[@nicoleeboo38]

Was a little bit worried that I was about to find out my cashback rewards were supposed to have been taxable the whole time, thank goodness that's not the case! 😌

[@Gambit135]

Not exactly a CC reward taxation example, but I had a similar taxation issue after opening a savings account. There was a $250 reward (cash credit to your account) if you maintained a certain avg balance over x months. Sure enough got my reward credit, but then during tax season got a 1099-INT that not only included my YTD interest earnings, but also the $250 reward tacked on as interest income. That was a bit of let down. lol.....I mean it does make sense, it was essentially bonus interest income rewarded beyond the stated rate, still annoying at the time lol.

[@DavidLynch10]

I love the grounded reality of this channel!!! *If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you..prevent inflation.*

[@Robert160-n5d]

I feel sympathy and empathy for our country, low income earners are suffering to survive, and I appreciate Wayne. You've helped my family with your advice. imagine investing $30,000 and receiving $95,460 after 28 days of trading.

[@SandraBennett170]

Honestly, our government has no idea how people are suffering these days. I feel sorry for disabled people who don't get the help they deserve. All thanks to Mr Michael Wayne, imagine investing $1000 and receiving $5700 in a few days..

[@Neill-y5q]

I'm in a similar situation where should I look to increase income? Do you have any advice? What did you do? Thank you

[@OwenWilson910]

Well, I engage in nice side hustles like investing, and the good thing is I do it with one one of the best(Michael Wayne), he's really good!

[@CharlotteLucas-b5s]

Did someone just mention Mr Wayne!? Damn! You just made my day; what a coincidence.. I've worked with him for over 2years and I can tell how good he is

[@vincenz5]

Just noticed this all of a sudden with this video- you're clearly making a great effort to consistently use your hands and face to express your points and keep the video engaging. Honestly, it's really impressive once you start to notice it. Thank you for doing that since the topic is of course fundamentally a dry topic that is difficult to make engaging.

[@investingkari9060]

Jasmine, I love how thoughtful and well-researched all your videos are! Thanks for the insight - good to know cashback vs points and personal vs business. Please continue to make educational videos!

[@fzigunov]

Refreshing to see somebody who knows their stuff take time to talk to the public! A question: If the credit card is used by a private person to purchase a good or travel for business purposes, and they get reimbursed by the company employer; then they effectively made money on the cashback rewards. Is that then taxable? This is a very common situation for corporate employees who travel or purchase materials for construction, etc.

[@callikesthis]

Jasmine, you make the best tax content on KZbin. Please keep going, it is so helpful to me as a small business owner. Thanks for putting in the extra effort.

[@MarkPlassmeyer]

Great presentation. I'm studying for my EA and have always had a geeky interest in reading the law and court opinions. My biggest takeaway from your video was the importance of research to understand the position of the IRS on matters, as well as how it might change.

[@vincentortega4284]

Hi Jasmine! Wow, I never really thought about rewards being taxable. Excellent content. Keep up the Great work Jasmine

[@aurianfaridi4207]

I love how casual you are about that KZbin plaque! Put that shit on the wall girl! You deserve it. Celebrate your wins.

[@boy_named_niel]

I was under the impression they weren’t taxable because it wasn’t a net gain on income. Spending $100 to get $2 back didn’t get you $102 overall, but just a discount essentially. The same rationale applied to sign up bonus worth $1000, because you had to spend money to get money it was still treated like a discount

[@theBear89451]

For non-business expenses of $100, then yes.

[@notpublic8961]

Yeah, it's hard to watch your assumptions get obliterated, isn't it?

[@g.t.richardson6311]

send me a 1099 pompous rear end

[@robertsalazar2770]

I think that's what she said.

[@shaunbava1801]

That was my thought, the rewards are a rebate, it's an enticement to continue to conduct business with a vendor, they do points or cash back so they can hold the money. It is a different animal when you earn points/miles for a business expense and then redeem said points/miles for non-business expense. But I totally understand the logistics of trying to value miles or points as they generally do not have a cash value and can be redeemed at various values so there is no point in the IRS trying to tax these.

[@fatmanchew909]

The only time I know anything is taxable from my bank/credit card is when I get that 1099 form in February telling me how much interest/dividends/etc I get to enjoy paying taxes on.

[@notpublic8961]

Have fun at your IRS audit!

[@g.t.richardson6311]

irs isn’t coming after rewards Enjoy your crow

[@sman5877]

glad i found this channel. her explanations are pretty easy to understand.😊 thank you 🙏

[@robsprats3900]

This was an excellent analysis, but I think you're missing the bigger picture. Let's say the IRS argued what the judge said they should have argued in Anikeev and the IRS had won the case. In doing that the court would have fundamentally changed tax policy for every business in America that uses a credit card, who would also then be subject to the specifics of the Anikeev ruling. That's a lot of businesses that could be affected overnight! Then throw in the other complexities you bring up in valuing reward points and it's a mess. And let's make it even more fun: Let's consider rewards cards that earn 5x points at restaurants for business meals, which themselves are often limited to a 50% deduction. Want to recalculate that "income" to factor in the different earn rates and then exclude 50% of that particular earn rate on some expenses? That is the path to madness. That's what the IRS may have caused if they argued this case the right way and happened to create precedence in the process. I believe it's more plausible that once the IRS realized that could happen they intentionally chose not to make their best argument.

[@MoNATUREnique]

Thanks so much for going through the actual law. I will now keep a look out if the law decides to change. I feel people would be hesitant to use reward credit cards if taxes were involved.

[@taxleverage]

Of course! I love going through the ACTAUL tax law, haha

[@PureInsanity]

It's not when used, its when earned. And I feel like people would switch to cards that earn straight cashback instead of miles. Majority of my cards are the former kind, and they are usually better, so no loss there.

[@brianhartnett9374]

I learn so much from each video you post each one is packed with terrifically 😢useful information. Thank you!

[@anthonyhobson367]

Awesome video yet again… I appreciate the distinction you established between cash rebates/reward points and cash credits for opening new accounts, and why the latter is taxable 👍🏾👍🏾

[@taxleverage]

So glad you enjoyed the video!

[@eubankles]

Shhhheewwww! I have $3k saved up and this video made me NERVOUS! Wouldn’t surprise me if the IRS found a way in the future. Safe for now as mentioned…Great job once again!

[@halking3497]

That is best tax presentation I ever heard. I had long wondered about that. Now I know. Thank you.

[@761sttankbattalion]

all this information helps me with my personal taxes and my starting business

[@taxleverage]

So glad to hear you find it helpful :)

[@joeygee11]

Best channel with real world guidance.

[@richfranck8365]

Suggestion for Future Video: 1099 vs W2 for S-Corp's Reasonable Compensation A Virginia LLC treated as an S-corp is owned by a Wyoming single-member LLC. Rather than the S-corp paying W2 wages, the Reasonable Compensation could be paid to the WY LLC as 1099 management fees. "The IRS will reclassify all 1099-MISC payments made to S Corp owners as W-2 wages." However, in this scenario, the owner will be an LLC (with a management agreement with the S Corporation). Because the LLC owner is not an individual, it cannot be an employee, and cannot be issued a Form W-2, so under the IRS's own rules, it seems that the S Corporation would have to pay the LLC owner reasonable compensation as Form 1099 management fees.

[@josevega6554]

Jasmine. Excellent explanation. Please create more content like this one. I enjoy learning tax law. 👏🏻

[@taxleverage]

More coming! Stay tuned

[@Drumbeat52]

If I don't receive a form 1099 or any forms from the bank, then I don't claim it. It's not my job to do the banks job. The IRS is form driven so no forms, no claims. My opinion.

[@robertsalazar2770]

I must say your videos make me nervous. I use a CPA because tax the government makes me nervous. But thanks. You're providing good information.

[@shlomobenzaquen974]

Love your long form content!!

[@taxleverage]

Thank you!

[@court2379]

Credit card rewards are a credit back on money you spent. A discount on the price, not income. Taxing them would be like taxing coupons. You saved $10, oh, your going to have to report that as income...

[@franciscanstudent]

Fellow LLM tax here Great job explaining the material! However, I think you'd get a different result if you were discussing referral bonuses that many CC issues pay to their users when they refer others to become card holders. These cannot be, IMHO, characterized as rebates on purchases, such as most sign-up bonuses are.

[@LegitParker]

Anikeev v. Commissioner is such an interesting case! great video.

[@igorslagathore1307]

How does it work in an example of using Amazon points to buy items from Amazon? Is it treated like a reduction in cost to the points of getting the item for free? Also, on the note, are gift cards taxable, or are they also a reduction of cost and therefore not taxable?

[@markaustin5269]

Good question. I use use my reward points for an Amazon gift card. Never got a statement from the bank saying they are taxable like I do with earned interest.

[@FG-yx6eg]

I really appreciate you walking through the analysis. The topic is uninteresting, analysis good.

[@DavidKnicks]

This was a much needed video

[@Kyzyl_Tuva]

That was a fantastic video. Thank you!

[@mike2959]

You said the magic word about half way through. Rebate. I have 40+ rentals. And also own a restaurant. Combined gross income is over 2m for the year. I use 2 cards. A 2% cash back net 30 Capital One. And a Chase Reserve for particular types of purchases. Hold your breathe… $57,932 last year in cash rewards. This year will be over $64K. We use a card for every single aspect of our business except for payroll. If a vendor doesn’t take a card, we don’t do business. Period. It’s 2024 take a card. We go on 4 really nice vacations every year.

[@mrnobody8540]

Good - your lose, I don't wish to use your credit card as payment - if you don't have cash - your not buying! Not getting into my pocket for your business ventures --- if you are buying in regular bulk, then you can arrange a fund transfer from your bank payment COD. If you need OPM - get a loan

[@sirano2006]

Sounds like with 2m revenue you still can’t figure to go to a valuation, if it wasn’t coming with cash-backs.

[@notpublic8961]

I wonder if Mikey even picked up on the point of this video that all those cash rewards are taxable... I also wonder how much Mikey pays in credit card fees since many vendors will charge for using a credit card. I also wonder if Mikey even knows.

[@mrnobody8540]

@@notpublic8961 People don't understand credit card is a game of chaining your future to death by enslavement... It's a tool to use for personal stuff and bills as long as you use it correctly... In business - it's not smart 🤓 - if you need a line of credit, open a bank account for that... Definitely don't mind debit cards - but cash is King 👑 -

[@mike2959]

@ lol. Funny guy. Only my grandpa calls me Mikey. And it’s called a rebate. As long as you spend something to get something it’s a rebate. Real simple.

[@andrewjames2721]

What if I refer someone (without spending money) and receive points? From what I’ve seen online, those would be taxable because it is no longer a rebate.

[@anthonyhobson367]

Great question and I’m definitely interested in her response (hopefully)… but based on her comments this might falls into the category of not worth pursuing because it’s hard to place a definitive value on the points… 🤷🏽‍♂️🤷🏽‍♂️

[@andrewjames2721]

@@anthonyhobson367after watching the video, I feel like they could be classified in the same way for the same reason. Guess we’ll see.

[@Rclsllh]

Cool videos but I have an unrelated question, where do you buy your tops? Looks like all your videos are the same blouse different colors and I love the simplicity. Even your adorable daughter has the same mini top. Is it tax deductible?

[@drewk75]

If they start taxing cash back people will try saying "Well I spent $100 to earn that $1 in cash back, so that $100 is an expense that I'm now going to deduct." Obviously that won't work, but people will try it.

[@monkmoore]

Excellent. I would have like to seen the scenario of a business purchase reimbursed by the employer. Since no deduction is taken by the employee, I gather these would be taxable. However, some employees may incur interest charges between purchase and employer reimbursement which I wonder if adjusts their basis?

[@esw01407]

Very interesting, thank you for this breakdown!

[@stich1960]

I'm a little confused on the ending, so does that mean if you take a business cash back reward and transfer it for personal use does that still seemingly comply? Or is it only if the reward is generated with personal money? It seems like if you use the reward for personal items it wouldn't trigger that because you're not doing the double dipping or am I missing something?

[@arequina]

Jamine, you're damn OP. Loving it.

[@k.chriscaldwell4141]

Yes, but they’ll wait years to come after you-after years of ”interest” and “penalties” they claim have accrued.

[@MrGus.1]

Well done! A clear explanation of a murky subject.

[@SomeGuyFromUtah]

Question - regarding the Chevron being overturned... does this open the door for challenges on IRS Guidance and Treasury Regulations if it's not clearly outlined in the statute and has limited relevant case law? With the rewards that can't be redeemed for - that seems like an agreement between the customer and the business that isn't really linked to a dollar money amount. Just because the airline says you have X dollars worth of miles... the end result is them giving you a discount, so I don't see how getting a discount for a purchase should be taxable. With rewards that can be redeemed for cash or that have a cash value that can be used anywhere, I could definitely see how that could be considered taxable. Even the precedent/guidance presented in this case goes against cash back because if VISA gives me cash back for a purchase at a Restaurant, the restaurant isn't the one offering the discount.

[@notpublic8961]

I doubt Chevron applies since all overturning Chevron did was to allow courts to review executive expertise. That already happens with taxes. It's called tax court. Your second point is moot since the IRS isn't pursuing points as taxable.

[@Pens4Life85]

They **could** tax them, but they won't. Too minor and trivial compared to income.

[@bikeguyhd1035]

Then they would also tax you on coupons and sale prices. Cash back is a discount, not income.

[@Pens4Life85]

@bikeguyhd1035 cash back is not the only thing CC rewards provide. Non-cash gifts or rewards converted into tangible goods **could** be taxed, but intricacy and admin time for IRS isn't worth it.

[@bikeguyhd1035]

@ yeah I’m just saying we don’t need them to get the idea that they can start taxing those things.

[@Pens4Life85]

@bikeguyhd1035 according to my MBA tax class in 2023, IRS has zero appetite for it.

[@KK-pm7ud]

Too complicated I think

[@misstbikini]

Most valuable content!!! 🎉

[@taxleverage]

Glad you're enjoying!!

[@willburton2051]

Great content. What about investment brokerage credit card rewards deposited directly into an IRA? For example, Fidelity and Robinhood credit cards?

[@BobGrimminger]

I think I understood the video, but I have a question. Why doesn't the IRS treat points similarly to cash in that they effectively represent a lowering of the price of the item where you can use those "point savings" on other items from a limited list? Example: "I use my cash back on a plane ticket" versus "I used my points for a plane ticket". Both represent value from the card that effectively lowers the price of stuff I bought with the card by the plane ticket's cost. Both just let me get more stuff from the same amount of spending. Does it have to do with the value of rewards in comparison to cashback?

[@PureInsanity]

Thank you. Does it matter if I make a personal purchase on a business credit card, or is it my intention with the item that differentiates between a business purchase and a personal one? Also, according to this video, referral rewards are taxable since they aren't a reduction in the price of the item you buy so it makes sense that chase and Amex send 1099 for refferals, correct?

[@toddbarney4738]

Well, that's probably just one example of why it's a bad idea to make personal purchases on your business card. Pretty sure my Chase Business Visa terms & conditions expressly forbids using it for personal purchases. It also says this about points generated using the card: "you will ensure that all points are used... to benefit only the company and not for the personal benefit of any individual."

[@thedalillama]

Taxation of such benefits would be absurd. The benefits are paid for in aggregate. Some cardholders just benefit at the expense of others. The IRS should only be concerned about the aggregate.

[@VitalXtreme]

What's your personal opinion on the channel ClearValue tax? He is also a CPA.

[@DoubleOhSilver]

There is almost never any gray. It usually just means the person has a myopic perspective and can't distinguish black and white

[@taxleverage]

Exactly! Just gray in their mind, haha

[@KK-pm7ud]

I think I may have missed it. Was there a clear determination where gift cards sit in your summary at the end? As frequent flyer miles or as cash? I can see rhe argument for either related to business.

[@allenwang2894]

Question on Amex points transfer to Schwab IRA account. Charles Schwab allows for transfer above the contribution limit. Is this legal?

[@Immacu1ate]

Jasmine, what about referring a friend to a credit card and getting a referral bonus that’s given in points? Chase sends out 1099s for this, but Chase is giving points not cash.

[@hamonrye9823]

She's the best

[@oj9886]

Can you do a video on credit card that give crypto as cash back like the Gemini credit card. How will that crypto be taxed ?

[@adamhodson2710]

Where was the link to sign up for classes?

[@towncenter7602]

Taxes are optional for free sovereign individuals. Being forced to pay a tax is for slaves. A slave pays 100% of their labor in tax... and what % are you not a slave anymore. The answer is 0 and look what happens if you resist the slave masters.... who here enjoys being a tax slave?

[@thebestlifejeremy]

Amazing content

[@taxleverage]

Thank you! Glad you enjoyed

[@thebestlifejeremy]

@taxleverage my pleasure

[@acmax5407]

Great video. Now please explain crypto tax law in centralize and decentralized exchange.

[@brandonwidmayer1427]

Hi I have a nuanced question wondering if you would have an answer. This relates to Supreme Court case commissioner versus Glenshaw glass “over which the tax payers have complete dominion” my question is in regards to that as I’m a profesional gambler and sometimes use offshore sportsbooks which have high rollover (amount to wager before being able to withdraw) if I made $20,000 on this offshore sportsbook but still couldn’t withdraw as I didn’t yet hit the rollover requirement in the year that I made that money do I not have to declare that as income until I reach the rollover requirement? IE I could push the taxes back a year if I wait to hit the rollover at the beginning of the new year. Would love an answer.

[@MauricioRodriguez-v2y]

Do you also provide international tax using CFCs and asset protection?

[@dallasgombash5381]

California charges sales tax on before discount price

[@pdxshredder6883]

Suppose I earn points on a business purchase and convert those into statement credit, would those also be "safe"?

[@middleagebrotips3454]

And that brought in decades of credit card industry growth and everything is 5% more expensive

[@DavidKnicks]

Okay now what if you use a business credit card for personal items and get cash back on a business credit card for stuff that you bought with that was for personal use

[@chadmcdowell5582]

What about a statement credit?

[@rubenvelazquez4847]

With the apple card you have and option for cash back to to be transferred into a high yeald saving account. Is the cash back transferred to that account taxable?

[@mike2959]

One other thing, I’m pretty sure that Chase, Capital One, Wells Fargo….all of there tax attorneys and CPA’s are a little sharper than all of us here in KZbin 😅. I would think they would send a 1099 misc out? We’re taking the largest banks in the world.

[@g.t.richardson6311]

They send a 1099 for like the 300 you may get for opening a new checking Considered interest … never got any 1099s for points or rewards

[@mike2959]

@ Correct. Because you didn’t spend anything to get that $300. As long as you spend something to get something it’s a rebate. And rebates are not taxable. Or all those rebates we mailed in the old days would be taxable.

[@joedirt5521]

This Taxing has Gotten out of control,

[@virginia3168]

Imagine the attorney fees on that one!

[@ckhayne2]

What about this offer I have from Chase; where if I open a new checking account and have Direct Deposit setup for three months, they give me $300 credited to my account? Then if I also put $15k in a savings account for 3 months with them, they will credit an additional $600 into the Savings account. Is that $900 taxable income?

[@notpublic8961]

Yes. And they will send you a 1099 for it.

[@g.t.richardson6311]

For sure it is I forget if they sen 1099 misc or int I think it’s counted as interest

[@tigo01]

wait a second, If cash back reduces the basis, then shouldn't I be able to get a sales tax refund?!

[@toddbarney4738]

Does state sales tax work the same was reported income when it comes to cost basis? Interesting question. I wonder if anyone has ever pursued this? The merchant would have already submitted the sales tax for the full amount to the state, so I suppose you'd need to file a sales tax return. I think my state has a mechanism where you're supposed to report and pay any sales tax that wasn't collected on purchases you've made ( I don't know anybody who does this!), but I don't know if there's a way to request a refund.

[@kunsangG]

thankyou so much

[@josefmazzeo6628]

If I find $100 on the street, I am NOT reporting it - screw them - they can't prove stuff like that.

[@kevincinnamontoast3669]

Ultimately its a moral choice. Should taxes be used to build roads,schools etc? Incarcerate losers( not calling you a loser)?

[@jamesodell3064]

To me airline rewards and just a reduction in the price of a ticket when purchased by an individual, but when the original tickets were purchased by a company and the rewards used for personal purposes then the rewards should be treated as income.

[@KK-pm7ud]

In the video Jasmine says that the IRS doesn't say that frequent flyer miles aren't taxable. Just that the IRS is not enforcing because it is too inconvenient to audit or make determinations as to the value since the value can change.

[@teeconsigliano7631]

So basically no

[@vgshwk]

If it wasn’t for rewards points many businesses might go out of business.

[@cantgetright742]

You mean you made some money? We’re gonna need half of that.

[@mabmab7373]

Khunmalay

[@bdimon]

I think i understand your explanation, but my head hurts. 🤕

[@JW-eq3vj]

If I love tax law as much a you do? Man, we've grown up to be very boring adults. Haven't we? 😀

[@taxleverage]

Haha, eat, breathe, sleep tax law

[@frankb1]

Stay out of the gray

[@YouProblyAHater]

Hello, beautiful tax lady 😅

[@Pens4Life85]

There's always one. Why? You people have got to be like Bulgarian traffickers or something weird.

[@akmalone3009]

The audio isn't working

[@The-Musicians-Edge]

Audio sounds fine for me

[@Pens4Life85]

It's fine

[@igorslagathore1307]

Sometimes that happens if you were watching through the rabbit hole of youtube shorts. Try backing all the way out and make sure there's now shorts playing. Or close the app completely and the go to your youtube history to play the video again and the audio should work fine.

[@akmalone3009]

@igorslagathore1307 closing youtube and coming back worked. Thx

[@thelastoneee3741]

what the onlyfans?

[@Da_Crow]

Is Jasmine married? asking for a friend

[@761sttankbattalion]

turbodre1 giveaway

[@taxleverage]

You've been entered! I will reach out to the winner personally on IG

[@Brendonbosy]

Funny, lazy govt IRS workers who make 3x what you earn are happy to tax you over the meager $100 cash back you earn a year, but those crippling credit card fees and interest charges? No tax credit for that

[@mav1120]

Tbh, just appreciate how you break down explanations. @kenkennykennnyg