Are the Points and Miles I Redeem Taxable?

When it comes to reward points, airline miles, hotel rewards, and rebates, what’s not to like? You’re spending money to operate your business, on travel, supplies, or just about any purchase you make. Why not get a little back to help with the bottom line?

People rack up these rewards and pretty much don’t think about them until they’re ready to convert them to money or other goodies. Sometimes they’re straight money-back deals, such as the rebates that are shared by Internet companies when you buy online through their services. It’s quite a surprise if you discover that some of these rewards may be taxable.

The difficulty when dealing with the government, and particularly the IRS, is that they are good at making and enforcing rules. Rules also seem to get more complicated as they add layers and enforcement objectives. Whether points, rewards, airline miles, or rebates are taxable is complicated, but this overview should help you to figure out where to focus your concerns.