{"id":4896,"date":"2021-08-22T09:04:03","date_gmt":"2021-08-22T09:04:03","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=4896"},"modified":"2021-08-22T09:04:13","modified_gmt":"2021-08-22T09:04:13","slug":"redeem-credit-card-rewards-points-tax","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/redeem-credit-card-rewards-points-tax\/","title":{"rendered":"Redeeming credit card rewards points to cash is taxable: Court"},"content":{"rendered":"\n

Credit card rewards are the common motivation for people to purchase goods or services and get more receive reward points. When you use these credit card rewards<\/em> points to acquire further goods or services or even converting to cash, a natural question must arise ” How are credit card rewards taxed?”.<\/em><\/p>\n\n\n\n

Now, these reward points are not considered till when you use the points to buy the reward of the good. The rationale behind this is that the rewards act as a discount on the consumer’s property or services. So, IRS does not try to tax such redemption of reward points.<\/p>\n\n\n\n

Cashback credit card rewards to a savings account ?<\/h2>\n\n\n\n

In an interesting ruling in the case of Konstantin Anikeev and Nadezhda Anikeev v. Commissioner of Internal Revenue<\/a> <\/em>,<\/strong> the United States Tax Court held that the redemption of credit card reward points, which are earned from buying ‘cash equivalents’, shall be liable to tax. <\/p>\n\n\n\n

The facts of the case were that the taxpayer had two American Express credit cards (Amex Cards) which were used to buy Visa Gift Cards and then used those visa gift cards to buy money orders. The next shrewd step was to deposit the money orders into his bank account. Ultimately, the money so credited was used to pay the Amex credit card bills. <\/p>\n\n\n\n