Recently read that the money you receive from cash back credit cards are not taxed. I pay everything possible with a cash back credit card including my real estate tax. Have to watch Ultility companies. During the pandemic they only charged a very small fee but since have tripled it.
Buy it cheap, stack it deep!
- Thread starter VirutalElectrician
- Start date
- Status
kwired
Electron manager
- Location
- NE Nebraska
- Occupation
- EC
Possibly true. I guess it depends if they report those payments like they would do for interest for savings or other investment accounts. But if this is not taxable then why would they report it? Or hasn't the government given this much thought yet? Probably needs to go through lawmakers more so than IRS just starts to require it.
LarryFine
Master Electrician Electric Contractor Richmond VA
- Location
- Henrico County, VA
- Occupation
- Electrical Contractor
Didn't you pay tax on it already, when you earned it?
kwired
Electron manager
- Location
- NE Nebraska
- Occupation
- EC
You earned your money, then spent it via a credit card. Presuming you paid card in full and never spent any on interest this cash back is money you wouldn't have had with a card that doesn't offer the cash back incentive. Is that taxable income or not? IDK. If it were they likely would issue a 1099 or other document as well as report it to IRS.
LarryFine
Master Electrician Electric Contractor Richmond VA
- Location
- Henrico County, VA
- Occupation
- Electrical Contractor
Seems like a discount to me.
kwired
Electron manager
- Location
- NE Nebraska
- Occupation
- EC
I agree it sort of is. They do this assuming most cardholders will carry some balance and will still earn more on interest than they pay out on this cash back thing. My BIL however has for years always purchased most things (groceries, gas, etc.) with his cash back card, and then paid the entire balance every month so he pays no interest and gets back a little of what he spent as well.
Usually the IRS does not require reporting on earnings under $600. At the $600 mark think it called a I600 form that companies have to report & send you a I600 stating how much money they paid you.
It appears to me that 11% of everything purchased from Menards that you deduct as a business expense is actually not used in your business, but rather for personal use.
Disclaimer: I am not a tax accountant.
- Location
- Wisconsin
- Occupation
- PE (Retired) - Power Systems
A rebate is not taxable. According to Turbotax/Intuit, the tax software company, "the IRS treats them as discounts rather than income"
Of course if the reason for the rebate is to cheat on or skip taxes, the IRS would probably change its mind.
Of course if the reason for the rebate is to cheat on or skip taxes, the IRS would probably change its mind.
I believe that’s in the context of an individual, not a business that’s taking the full purchase price as a business expense deduction.
A business can only expense the net cost, not the price before discount.
VirutalElectrician
Senior Member
- Location
- Mpls, MN
- Occupation
- Sparky - Trying to be retired
Since when has taxing you more than once ever concerned the government?
VirutalElectrician
Senior Member
- Location
- Mpls, MN
- Occupation
- Sparky - Trying to be retired
kwired
Electron manager
- Location
- NE Nebraska
- Occupation
- EC
True. When entering your expense you would need another entry of some sort to balance out your accounting to take the discount into consideration. Not saying there isn't a way around it at all, but you need to put in some effort to do so and if there is a random transaction here of there of no real significant amount they probably will overlook that if you were audited. If nearly all your purchases were like this or at least a significant amount in comparison to your overall purchases they probably will take further action on it, again that is if found during an audit. No audit they likely never know about it.
When you purchase items with your rebate full price is on your receipt. Rebate amount is entered as a payment method on the receipt, for your accounting purposes you treat it as a discount if you are otherwise tracking full purchase price for individual items. If not enough rebate to pay the full amount then whatever other payment method you use is for the remaining balance. You probably don't have a cash asset account set up for said rebates in your accounting system. Even if you did, you would have an income account associated every time you had new rebates to add to that account. This arrangement would make it all come out same in the end you just have further tracking ability of the rebates should you want to track them.
- Status