Is Cash Back Taxable?

“Are cash-backs received from purchases considered taxable income?

Credit card cash-back rewards are generally NOT taxable. They are considered a rebate offered on purchase price rather than income. There are a couple of exceptions – if there is no spending requirement to earn a reward then it would be considered taxable by the IRS. For instance, if a credit card offers a cash back bonus just for signing up, that would be taxable. Also, if cash back is received for referring a friend, it’s considered compensation for a service, like a commission. In this case, the cash-back bonus would be taxable. Additionally, if a business receives credit card rewards, they would need to subtract the benefit from any business expenses they are deducting for tax purposes.”

Read more from Nichole Williams in “Is Cash Back Taxable?” on MoneyGeek.com here.