So who was losing money in this deal? I assume this article is behind a firewall.
Bkmk
IF “credit-card rewards aren’t income” then how little or how much he accumulated is irrelevant unless IRS is going to come after all of us for these funds as income.
Can he pay the IRS with gift cards?
7 Mar 2921
In the year 2921....
I forgot the rest of the lyrics.
I believe the IRS announced several years ago that they were not going to treat airline frequent flyer rewards as income. So i wonder what they think about hotel stay rewards, etc.
The tax on $310k added on top of his income is going to be a big number.
If he got 1099 forms for all that rewards money his case might be a little more difficult.
Cue “Tax Man” by the Beatles.
When you get cash-back rewards, it’s not taxable. It’s like a partial refund on paying your credit card bill. The money you use to pay your credit card bill has already been taxed.
I get it now. Ignore my first response.
I can see where this could be considered short term capital gains.
I did simar things buying good and silver. I got a notice that all purchase like that will now be treated as a cash advance with no rewards.
Sounds like the original PONZI scheme without all the investors.
https://en.wikipedia.org/wiki/Ponzi_scheme
Interesting and I see how it works. Too bad they ruled it income but at $300k he’s still up around $200k after taxes. Not bad for a “fun” side hustle outside of his main profession.
ping - taxable credit card rewards
The article is here:
he must of found someone who would give out money orders for free using a credit card (or for a fee far smaller than the 5% discount he was getting)
Then he just ramped it up, until the numbers flowing through his bank grew large enough for the bank to report the activity to the IRS.
here is a better link that describes better how he did it, without a paywall.
Plcmrk
Rewards are discounts. Do we have to pay income taxes on our grocery store coupons?
Stupid article.