"Disclaimer" I do not have the professional knowledge of tax, the following are from the IRS website, Web analysis and my own analysis.If you need a tax professional, please consult with an attorney.
"2016.1.27" on MISC taxable income tax, see Chapter 3.3
- 1. United States tax basics
- 2. What incentive income do not need to collect taxes (Nontaxable Income)
- 3. What incentive income tax (Taxable Income)
- 4. A few concrete examples
- 5. Summary
1. United States tax basics
Every year in January-March, an American tax season.Through the tax, we calculate their previous year's income and expenditure, determines that it should be of tax revenue, and compare federal and State withholding taxes, final reporting is a tax or a tax rebate.For Americans and green card holders and HRDC, tax is the norm.In the United States study abroad students, tax is essential.If you are not sure whether you need a tax, it is recommended to ask related departments of the school.Here two students (5 years in the United States) tax frequently asked questions
- Students with no income tax?(No need to fill out the 1040EZ tax returns, but are required to complete the submission 8843)
- School work/research assistant/teaching assistant income do you need tax?(Need to 1040nr-EZ/1040nr a tax)
Playing card play points for us people, we care most about is:
- My Awards (open card rewards, interest income, cash back rebates, Lottery revenues, referral income) tax it-what do you need?
- If you need a tax, how should I report it?
- Banks will get the income reported to the IRS in this regard?
- Circumstances under which tax must be reported?
In order to answer this question, let me first give you differentiate: tax income (taxable income) and non-tax revenue (nontaxable INCOM).Among them, the nontaxable income sure is free of tax.Taxable income you report, still want to see a different situation.
2. What incentive income do not need to collect taxes (Nontaxable Income)
2.1 cash back without taxes
For a typical Nontaxable Income, IRS has a clear definition: click to view the IRS files.Most nontaxable income for us is:
- Cash rebates from a dealer or manufacturer for an item you buy
Cash Rebates can be extended as follows:
- Credit card to get cash back
- From cash back shopping network to get cash back
- Merchant discounts, shopping gift card, Mail in rebate
- Credit card rewards
Among them, the former are very easy to understand, you're banking, cash back when shopping networks, businesses are likely to inspire you through various forms of consumption, which are often paid cash back for you.So that part of the income is not taxed.Credit card rewards are considered by many to be a rebate, such as Chase Sapphire Preferred card sent 50k+5k UR point, need to consume $4000 to arrive.You can 55K UR/$4k=13.75UR/$ card incentives as a percentage of cash back new, every $ 1 you, the credit card company will give you 13.75UR as a rebate.Of course, the IRS did not raise a tax collector on the opening reward the special regulations, at least not to people opening bonus tax has no adverse effects.
Need special attention are: consumption refers to personal consumption here, if your consumer is the consumer or the company is shopping for human trafficking, the rebate cannot be said to be without tax.It will introduce in detail in section 3.3 below.
Points 2.2 miles tax
If cash back do not need tax return to calculate the mileage points of it?As we know, mileage (UA,AA,DELTA) while it was still in our accounts are owned by the airline, in other words, the mileage is not our income.Only when when we used the mileage redemption tickets, mileage can be truly get on our revenues.Airline mileage may be converted into cash value for your tax return (for example, 100 mile =$2).Again, this also applies to all hotels (SPG, Marriott, IHG) and various points in the Bank (UR, and MR, and TYP).Here so much, in fact, key to:
- Mileage points redeemed when tax issues to consider
And when you consider the tax issue when should the tax depends entirely on how you get points.Assuming that your mileage points are credit card rewards or the usual credit card gets, or take a plane to get mileage.These can be considered the rebate, so of course this is Nontaxable.And if you get these points through the Bank, like Citi gets 40k Gold Deposit AA miles, so if in Exchange the banks with an estimated value of more than $600 it is possible to receive tax tables.
2.3 interest tax for some groups do not need to be
Bank checking account (checking account) and savings accounts (saving account), interest income and Bank rewards, most people pay taxes.As for nonresident (such as in the United States have not completed 5 years of students), that portion of the income is not required to pay tax.So if you open an account or get interest deducted taxes, can fill this part back.If you received your bank sends you tax tables, are not taxed.You can fill out this part of their income on:
- 1040NR Line 9b. Tax-exempt interest
Bank account opening rewards are taxable for other groups, I think maybe the reward is not you spend to get, but by saving money get in the way.Therefore, the award could also be seen as interest income.
2.4 Summary of the no tax
- Credit card rewards, cash back rebates not reported daily consumption tax
- Shopping cash back rebate cash back network without tax
- Interest or Nonresident bank account opening rewards do not have to pay tax
3. What incentive income tax (Taxable Income)
Speak simply is Taxable Income need tax for Taxable Income IRS also has detailed analysis: IRS website article.If you have been sent a tax return, it is best to tax under the Ordinance, if you have not been sent, then all by self.
3.1 What is being sent tax returns
When certain Taxable income in your bank every year some other agencies will take the initiative to your income reported to the IRS (commonly known as being sent tax returns).For example,
- Interest on bank savings/checking account bonus income exceeds a certain amount (1099 INT)
- EBay, Amazon to sell things to get over a certain amount of income or the number of transactions over a certain (1099)
- Advertising (such as AdWorks) earn more than a certain amount of revenue, say, more than $600
- Sweepstakes, get higher rewards, such as more than $600 (1099MISC)
Of course, apart from the IRS you will also receive a copy of the tax return.If you are sending this type of tax returns on behalf of the IRS have your information.So, if you are not in accordance with the provisions of a tax or not, when it's your IRS spot check after, you may need to fine you or give you more serious consequences.If you are a Nonresident, then interest tax you do not need to pay.If you are not, as a group, please Darling tax taxes.
3.2 not send tax returns without return?
For most of the credit card, you earn referral are capped.Therefore, the General does not receive a tax return.For the other cash back network, as far as I know the eBates if you refer a friend to get more cash back than $600 will receive a tax return (1099MISC), so for the other site's referral income, preferably not more than $600, so as not to cause unnecessary trouble.So, if you do not receive tax tables, not tax yet?In fact, if you don't send in the tax tables, income belongs to report taxable income.Such as the following:
- Credit card and other accounts refer income
- Draw some small prizes
Under IRS rules, no matter how much this MISC income, tax is required:
Of course, if this part of the taxable income is less, I guess even if the IRS check up will not spend energies on small fish and shrimps.Whether you want to submit, he weighed.Suggest that those revenues more than consulting a lawyer.
3.3 the consumer (business spending), and commercial credit card tax
Get rebate for personal consumption is not a tax, but is different for commercial consumption.Especially in business spending on credit cards, for example, Chase Ink.People familiar with ink card know that ink cards in the Office supplies category 5x of UR return.5x for commercial consumption rebates and personal credit card 5x rebate (for example Chase Freedom quarter 5x) are very different in nature.Business credit card spending is aimed at commercial use (such as selling a product), and, of course, consumption resulted in profits tax every year.5x rebates should be converted into cash, deduct from the cost.For example,
- Use ink in Office supply store to buy something $1000, get 5k UR (=$50), sold access to $1200.You should report at the tax cost is $950, then the final selling price of the profits =1200-950=$250.The $250 is taxable.
So, in a commercial way, get businesses all rebate and rewards is to tax, because the calculation of profit is to join in the profits.
4. A few concrete examples
4.1 the Bank of 1099-int tax
Not less open discover checking for account opening rewards $300 who get 1099int from Discover.If you are a nonresident (F1 students identity, United States no less than 5 years), does not need to pay tax.Simply fill out this part of their income on: 1040NR Line 9B. Tax-exempt interest, you can.If you are not a non resident status, fill in the columns interest income.1099int similarly received from other banks can handle.
4.2 Citi Gold Checking tax
Citi Gold account before you can access 40k or 50k TYP AA Rewards and Citi a few years ago would you have this part of the reward when you send 1099MISC tax form, if you receive is supposed to return.Haven't heard about Citi in recent years tax returns, but it is recommended that all Exchange value not more than $600 each year.If it is checking the 50k TYP rewards, recommends that the direct exchange of value in $600 the following gift cards, if AA mileage Exchange finished in just one year is not recommended.
Citi Gold peacetime activities such as Bill pay can also accumulate TYP, need to pay special attention to this part of the TYP TYP is not the same as credit card back, this part of the TYP is Taxable, so if the Exchange within one year more than $600 tax.Is not yet clear what form, I guess too 1099MISC.
4.3 Bank refer income
Now banks refer income limit for each card, so basically no more than triggered banks to send you and the IRS tax returns (1099MISC).Among them, Discover highest income $500,Chase 50k UR/UA miles a year.Refer AMEX card number is 55K.Get refer rewards totalling more than $600, should logically be a tax, but personally feel that the amount is huge, IRS tend not to spend a lot of money check with your taxes.
Tax issues are very complicated, and there are many of them referred to exceptions to terms and made no mention of exceptions.So, I suggest if you have a lot of incentive income, it is best to consult a lawyer to figure out the problem.If you have any tax related experience, share in the comments are also welcome.