Are Credit Card Rewards Taxable Income? Man Taxed On $310,000 In Bonuses
03/08/21 AT 9:49 AM
While several credit cards offer unlimited rewards on purchases, one man found not all purchases made with the cards equally qualify as untaxable income.
Konstantin Anikeev, who is an experimental physicist, found out the hard way when he charged $6.4 million on his American Express credit card in 2013 and 2014 that the $310,000 in rewards he earned was deemed as taxable income, The Wall Street Journal reported.
American Express offers 5% cash back in rewards and lower fees on gift cards and money order purchases.
Anikeev racked up his rewards by buying prepaid Visa gift cards at grocery stores, purchasing the maximum allowed limit each day at a store, and then using the gift cards to buy money orders to make deposits in his bank accounts and pay his credit card bill, the WSJ said.