How do I increase credit card points
Use credit card points to pay for tax-deductible business expenses
For the sake of simplicity, let's first consider cashback. In general, credit card repayment is for that personal Not taxable use for which business Taxable use, however (a type I'll explain later). The reason for this is that most personal purchases are made with dollars after tax. Usually, you don't subtract the cost of what you bought from your personal income. So if you buy something that costs $ 100 and you get $ 2 back from the CC company, you effectively paid $ 98 for that item, but that wouldn't affect your tax bill. However, since businesses typically deduct most of their expenses, that $ 100 deduction would only have been a $ 98 deduction for business tax purposes. In this case, the USD 2 should be taken into account. Note, however, that you shouldn't consider that $ 2 as income. that would artificially increase your income. This should be treated as a negative expense, similar to returning a purchased item and receiving a CC refund.
Now to your specific questions:
Part 1: As a small business owner, I would like to attend an annual seminar to improve my business. I have enough Credit Card Reward Points to cover my flight, hotel, and rental car. Are these costs still deductible at the value stated on the receipt?
No, these costs are not deductible. When you deduct them, they are completely counteracted by the "refund" you receive for the payments.
Part 2: Does it matter whether these points are accumulated on my personal credit card and not on a business credit card?
It gets hairy here. For example, suppose your company policy calls for employees to make purchases with their own credit cards and submit receipts for reimbursement. In this case, the employer can simply reimburse and would not know or care whether the employee is collecting rewards / points / cashback. The trick is, as an employee, you usually always have to buy business-related items so you can show receipts. If you're getting cashback on the side, there seems to be one rule don't ask, don't tell IRS is okay with. This works the same for heavy business travelers and airline miles. The free vacations users receive as perks are not treated as taxable income. However, I would not bother to abuse this "loophole". Usually things like travel (flight, hotel, rental car, meals) are expected. But I wouldn't buy 100 corporate laptops on your personal card and ask the company to reimburse you. The company should buy these 100 laptops on one company card and effectively reduce the selling price through the cashback received. (Or, more realistically, negotiate a better discount with your account manager and just cut out a check for them.)
Part 3: Is there a difference between credit card points and brand loyalty points? If the rental car were paid for with points collected directly on the car rental company's (no CC) loyalty system, would this lead to a different result?
There is no difference. Perhaps the easiest way to think about it is that you can only deduct what costs you actually incur. In other words, the expense should appear on a bank or CC statement. If you volunteer and work for a charity for 10 hours, you cannot call this a "donation" of any amount of money as there is no actual payment that would appear on a bank statement. Instead, you could have billed the charity for your 10 hours of work and then turned around and returned the same amount to them, but in the end it's a wash.
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