Are credit card rewards taxable? Earlier this year some card issuers sent 1099s to cardholders for rewards they gave that were deemed by the issuer to be worth more than $600.

So, what's the answer? Credit card/mileage rewards are not taxable when they are given as a rebate on something you buy, says Lori Shrout, an enrolled agent-manager at the accounting firm Gumbiner Savett in Santa Monica, Calif. They could be taxable when they are given as a reward on something you did not purchase, like opening a bank account or filling out a survey, and if valued at $600 or more.

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Be careful of "free" rewards, says Erik Larson, president of, which provides independent reviews of services. If valued at more than $600, they must be reported to the IRS on a 1099 tax form, says Randy Schwartzman, partner-in-charge of the Northeast tax practice at BDO USA in Melville.

With potential taxes, are the rewards worth it? "Depending on the taxpayer's deductions, tax bracket and other income, the rewards bonus could turn into a tax bite," says Ben Woosley, director of marketing and consumer research at Credit

However, "if you get $1,000 worth of a sign-up bonus but pay $250 in taxes, you still get $750 benefit. Just make sure you use it and it doesn't expire," says Matthew Goldman, chief executive of Wallaby Financial in Pasadena, Calif.

If you get a 1099 form from your card issuer, don't ignore it. Declare the income on your tax return or face possible penalties.