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0 pointsarcticbull2y ago0 comments

Credit card points aren't taxable because they fall under the IRS rebate rule. They're treated like a coupon. Earning and spending frequent flyer miles is approximately equivalent, from the perspective of the IRS, to a 20% off bread coupon at your grocery store.

It doesn't change your point of course, I just find it interesting.

0 comments

ghaff2y ago

I expect it's one of those utterly unenforceable small-scale things that the IRS, at some point, decided to twist some logical reasoning around why it wasn't even going to try to enforce.

dataflow2y ago

It never made sense, given that the entity issuing the rebate isn't the same one you're paying. Like if your employer (or really, anyone else) cut you a $1M check because you bought a $1M house from a random person, is that really not taxable income because it was a "rebate"?

bombcar2y ago

The real ruling is that as long as you're not doing obvious scams and scandals with tax avoidance, the IRS doesn't really care.

So if you're getting "the equivalent" of $1k a year untaxed, the IRS yawns.

If you figure out how to run your entire salary through airline points, the IRS wakes up.

(The laws are complicated to decipher, but they basically come down to the above. The tax courts will look at things like "is this available to everyone, how much was it, etc, etc".)

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