Credit Card Rebates Reported on 1099?

Author: Board Monitor
BOARD MONITOR-ADMINISTRATOR
Joined: 05 May 2003
Posts: 459
Posted: Wed Sep 01, 2004 11:45 am
Post subject: Credit Card Rebates reported on 1099?

This message posted by e-mail request from one of the visitors to our site: At year end do "cash back" and other benefit credit cards typically send IRS a 1099 with the cardholders "benefits" for the year?

View our latest credit card ratings!



Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2256
Location: Illinois
Posted: Wed Sep 01, 2004 9:27 pm

I had the Citi Divident card, and don't recall seeing any 1099 forms for that one, I don't think so, cause it is going to technically fall under $600 balance, please correct me if I am wrong, just seems to look that way.

View our latest credit card ratings!



Author: Eugene
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 267
Location: Brooklyn, NY
Posted: Wed Sep 01, 2004 10:18 pm

Credit card cash back is never reported to the IRS, and you are not supposed to pay taxes on it for the reason that it is not income, but effectively a discount on the price of the products you buy. This logic is exactly the reason why you do not pay income taxes on $2 if you buy an item on a "$2 off sale" or use a coupon at a supermarket. I first saw the language that "You are responsible for any taxes that may be due on checks we may send you for your Dividend Dollar balances" on Citibank web site. It is still there, and it is very confusing, I think.

View our latest credit card ratings!



Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 379
Posted: Thu Sep 02, 2004 12:42 am

There are no 1099 forms filed, but that doesn't mean the money/discounts you receive can be ignored for tax purposes. For example, if you purchase a computer for $1000 wtih a 2% Cash Rebate card, you're getting the computer for $980.00. If you report the computer purchase as a business expense, you must report your cost as $980.00, not $1000.00. How you do the bookkeeping is up to you--but you can't report the cost as $1000.00 and just pocket the $20 bucks. Not legally, anyway--although I doubt the IRS would notice or care.

Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"

View our latest credit card ratings!



Author: Board Monitor
BOARD MONITOR-ADMINISTRATOR
Joined: 05 May 2003
Posts: 459
Posted: Thu Sep 02, 2004 7:32 am

Good points everyone. Eugene...great to hear from you!

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH 501-301-8474 FX

View our latest credit card ratings!