Did you know that credit card rebates & rewards are (generally) NOT taxable income?

A lot of people incorrectly classifying these on their business’s financials which can cost you more in taxes. It doesn’t sound like a whole lot but here’s an example:

Say you have monthly expenses of $20k that you use your credit card for and pay it off each month. And let’s say the average cash back rewards are 2% of your spending... that means you could annually receive $4,800 in credit card rewards.

If your tax rate is 20%, by classifying this non-taxable income incorrectly, you could be overpaying taxes by $960.

It doesn’t sound like a lot but think of what else could be swept under the rug that you’re not even thinking about...

This is why when we audit a clients taxes, we also want to look at their financials because there is so much more to the details than meets the eye.