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Cash back bonus offer
Old 05-18-2018, 02:12 PM   #1
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Cash back bonus offer

I know you have gotten them in the mail. Apply for a new credit card and get xxx amount of dollars cash back bonus. My question is if this is considered taxable income. When I have opened checking accounts with such offers they always sent a 1099-INT statement at the end of the year. Not so with the credit card companies.
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Old 05-18-2018, 02:14 PM   #2
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I have never gotten a 1099 for cashback bonuses from credit cards. Only from when I applied for checking/savings/CDs.

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I know you have gotten them in the mail. Apply for a new credit card and get xxx amount of dollars cash back bonus. My question is if this is considered taxable income. When I have opened checking accounts with such offers they always sent a 1099-INT statement at the end of the year. Not so with the credit card companies.
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Old 05-18-2018, 02:15 PM   #3
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Well, I did one of those last year and got a $150 cash bonus for opening a credit card and spending $500 within three months (mostly on groceries that we were going to buy anyway). No 1099 was received, didn't report it as income, and no nastygrams yet from the IRS.
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Old 05-18-2018, 02:18 PM   #4
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I got a cash bonus for a new deposit at Fidelity and they reported it as miscellaneous income.
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Old 05-18-2018, 03:34 PM   #5
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I’ve done this a couple of times and each time it was handled as a statement credit, not a check. No 1099s were received.
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Old 05-18-2018, 03:50 PM   #6
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I would assume the spending requirement is the reason why it is not considered income for tax purposes. No more than an advertised discount on bacon (could not help myself as bacon has not been mentioned for a while) at a grocery store is income. A crude analogy (for all but us bacon lovers ) I know but do believe that is the reason.
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Old 05-18-2018, 03:59 PM   #7
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Quote:
Originally Posted by Plantman View Post
I know you have gotten them in the mail. Apply for a new credit card and get xxx amount of dollars cash back bonus. My question is if this is considered taxable income. When I have opened checking accounts with such offers they always sent a 1099-INT statement at the end of the year. Not so with the credit card companies.
My significant cash bonuses from opening Chase checking and savings accounts last year were reported as interest income on a 1099-INT as I expected.

Never for any credit card.
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Old 05-18-2018, 05:24 PM   #8
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Cash back on credit card purchases is a rebate of incurred expenses; a discount applied to your purchases. Not taxable income, no 1099 issued.

Cash bonus from opening a checking account etc is not a discount on or rebate of expense and therefore 1099 taxable income.
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Old 05-18-2018, 05:39 PM   #9
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Quote:
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Apply for a new credit card and get xxx amount of dollars cash back bonus. My question is if this is considered taxable income.
Would it matter?
Would you be less likely to chase the bonus if it were taxed?
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Old 05-18-2018, 05:46 PM   #10
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Would it matter?
Would you be less likely to chase the bonus if it were taxed?
It sure matters come tax time! What's the problem with knowing in advance? Maybe the OP is managing income to get the subsidy, and doesn't want a year end surprise.
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Old 05-18-2018, 05:53 PM   #11
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It sure matters come tax time! What's the problem with knowing in advance? Maybe the OP is managing income to get the subsidy, and doesn't want a year end surprise.
Thank you! This is precisely why I am asking.
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Old 05-18-2018, 07:37 PM   #12
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Originally Posted by ocean view View Post
Cash back on credit card purchases is a rebate of incurred expenses; a discount applied to your purchases. Not taxable income, no 1099 issued.

Cash bonus from opening a checking account etc is not a discount on or rebate of expense and therefore 1099 taxable income.
+1.
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Old 05-21-2018, 04:29 PM   #13
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And if you pay extra tax b/c your AGI is over certain limits, some bonuses become not worth the trouble to get them. What do I need with 7 different bank accounts, that all have to be managed?

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It sure matters come tax time! What's the problem with knowing in advance? Maybe the OP is managing income to get the subsidy, and doesn't want a year end surprise.
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Old 05-21-2018, 09:38 PM   #14
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Well, I did one of those last year and got a $150 cash bonus for opening a credit card and spending $500 within three months (mostly on groceries that we were going to buy anyway). No 1099 was received, didn't report it as income, and no nastygrams yet from the IRS.
In this case the net amount would still be a "loss" of $350, so there is no reportable income here. Rebates are just discounts on purchases. No different than if you buy something on sale at Macy's. You don't get taxed on the amount of the discount, it's just a reduction of an expense.
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Old 05-21-2018, 09:40 PM   #15
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On the other hand, if you travel on business and spend $5,000 on travel expenses and then submit for reimbursement of the entire $5,000, but then you get back $100 on your credit card statement, this would be considered taxable income.

Whether people know this and make the effort to report it is another matter, but for business people who travel frequently and rack up significant perks, it can be a substantial amount of money. So far the IRS has not made much effort to chase this, but that could change.
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Old 05-22-2018, 07:42 AM   #16
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Originally Posted by ocean view View Post
Cash back on credit card purchases is a rebate of incurred expenses; a discount applied to your purchases. Not taxable income, no 1099 issued.

Cash bonus from opening a checking account etc is not a discount on or rebate of expense and therefore 1099 taxable income.
+1
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Old 05-22-2018, 07:56 AM   #17
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Got a 1099-INT from the year I signed up for a Discover cash back checking account.
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Old 05-22-2018, 09:10 AM   #18
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Check the terms on the "cash back" before you sign up!

Sometimes, you need to use the card x times per month for x months, for a total of x dollars, and a bunch of other hoops to jump through, before you get your statement credit 12 months later.

If you don't need another card, managing the new account can feel like w*rk. And that's what we're all trying to avoid!
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