And what is the difference between cashback for credit vs debit cards?
Edit: I believe I mean cashback rewards
In: 0
Cashback is important. It’s why you don’t pay taxes on it.
Many banks will pay you money for opening a new account with them. What they don’t tell you is that this will be reported to the IRS and you will owe taxes on the money they gave you. The IRS treats this money as interest.
With credit card bonuses (signup or cash back) the IRS treats this money as a discount on the item you are buying. A discount is not a taxable event so you will not get a 1099-INT for it. The sign up bonuses for credit cards almost always have a minimum purchase to receive the sign up bonus (and although the reward can be substantial) it will be less than the minimum spend.
Latest Answers