IRS alert: Your credit card rewards could be taxed — here’s the hidden rule to know

Some credit card rewards may be taxed, and taxpayers should know the hidden rules. While cashback from spending is usually safe, referral bonuses and no-spend welcome rewards can count as income.

Key takeaways

Quick scan — what you need to know:

• Some credit card rewards may be taxed, and taxpayers should know the hidden rules.
• While cashback from spending is usually safe, referral bonuses and no-spend welcome rewards can count as income.
• People may need to report them in tax returns.
• Experts warn to check forms and amounts carefully.

Background

What led here, in plain terms:

• Understanding these rules can help avoid mistakes before filing during the tax season.
• Some credit card rewards may be taxed, and taxpayers should know the hidden rules.
• While cashback from spending is usually safe, referral bonuses and no-spend welcome rewards can count as income.
• People may need to report them in tax returns.

Why it matters

Why readers and decision-makers should care:

• While cashback from spending is usually safe, referral bonuses and no-spend welcome rewards can count as income.
• People may need to report them in tax returns.
• Experts warn to check forms and amounts carefully.