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Question:


Will I ever get taxed on my frequent-flier miles that accrue from business travel or from cash back credit card transactions incurred from business use?
-Brady


Answer:


Ever is a long time, so it’s hard to say. For now, though, neither is taxable. Cash-back payments are tax free as long as they are tied to transactions made on a card rather than a bonus for signing up for the card or something similar. As for frequent-flier miles, the Internal Revenue Service recently issued an “agenda item” in its “primary guidance plan” that was interpreted within the travel industry as a hint of the agency’s intention to tax miles. Some accountants contend that the IRS can’t do that without an act of Congress, and they note that there is bound to be considerable push-back from lobbyists for airlines, hotels and other service providers, so taxation of miles is seen as unlikely for the time being. But again, you can never say never.

-Conrad de Aenlle



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