Taxes 2022: Do I Have to Pay Taxes on My Credit Card Rewards?
Making purchases with a rewards card allows you to earn cash back, points or airline miles to add value to your everyday spending. However, some of these perks may cost you extra when it’s time to pay your taxes.
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The types of rewards you earned and how you receive them determine whether they are taxable, says CNBC. The IRS views the redemption of credit card rewards and frequent flyer miles as non-taxable.
These types of rewards are not classified as taxable income and instead “they are treated as rebates or discounts on what you purchased,” Steven Rossman, CPA and shareholder at accounting firm Drucker & Scaccetti, tells CNBC Select. They aren’t taxable because you must spend money to receive them.
Some rewards cards offer welcome bonuses with no spending required. If you receive an award without first making a purchase, then that may be considered taxable income.
“The only time that credit card rewards are taxable is when you do nothing in exchange for the reward, i.e. you get 60,000 miles for signing up for a credit card, with no minimum spending,” Rossman adds.
See: Taxes 2022: Check the Status of Your Refund on the IRS App
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If you receive this type of award, you might receive Form 1099-INT (required if interest income is $10 or more) or a Form 1099-MISC (required if income is $600 or more) from your credit card company for the value of the reward, reports CNBC. Make sure you report any qualifying rewards bonuses when you file your taxes, whether or not you receive a 1099.
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