 Taxability
of credit card rebates, mileage
|
 Dear
Tax Talk,
Do I have to claim cash rebates from a credit card on my
taxes?
-- Jason
 Dear
Jason,
We are all enticed by the riches from promotions of rebates and
miles on our credit cards. Fortunately enough, the Internal Revenue
Service isn't similarly enticed or it just has no way to control
the whole situation. Credit card rebates and mileage offers are
considered purchase price adjustments so that they are not includable
in income, but rather a refund of prior purchases.
If you are refunded money on business purchases, then
the IRS would consider this a reduction to your allowable business
expenditures. If you are given miles on a business card and later
use those miles for personal purposes, the IRS will not consider
this income to you (according to IRS Announcement 2002-18). The
same applies for frequent-flier miles you earn on business-related
travel.
If
you're compensated for denied boarding on a personal trip and the compensation
exceeds your ticket price and other expenses, you would have a gain that technically
would be taxable. If it was a business trip on which you were denied boarding,
technically that compensation should reduce the cost of your travel. If
you donate your credit card cash rebates to charity, you are entitled to claim
a charitable contribution deduction. If you donate miles, there is no charitable
deduction. To ask a question on Tax Talk, go to the "Ask
the Experts" page, and select "taxes" as the topic. | 
