This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube tax-and-legal tip video titled "Tax Strategies for Frequent Flyer Miles and Credit Card Points | Mark J Kohler | Tax & Legal Tip" (published 2016-06-28). The clip is a solo presentation by Mark J. Kohler (who identifies himself as a CPA, attorney, best‑selling author and radio show host) offering practical strategies for small business owners on handling frequent‑flyer miles, credit card points and cash rebates for tax purposes. He explains an IRS exception (since 2002) that redemptions of points/rebates generally aren’t included in gross income and gives three strategies: pay business travel with business funds to take deductions rather than redeeming points for business travel; redeem points earned on deductible business expenses for personal travel tax‑free; and treat cash rebates as tax‑free (including directing rebates to charity to obtain a deduction). He also references additional resources (podcast, free ebook, social links) for more detail.
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Hi, Mark Kohler here with another quick tax and legal tip. Let's talk about frequent flyer miles and credit card points. I love this topic and there's a lot of opportunity to save some big money with this one. Typically, gross income includes any income derived from any source. But there's an exception when it comes to frequent fire miles, credit card points and and cash rebates from credit cards. This is huge and you want to take advantage of it. Before I get into three important strategies on this point, let me hit the exception. Since 2002, the IRS has deemed that credit card points, hotel points, credit card point, cash rebates. All of that is not included in your gross income for your business or personal income. That's a huge exception. No income when you make a redemption Strategy number one is pay for any business purpose, travel out of your business, pay for it. Take the tax write off. Do not redeem points for business, travel, hotels, anything like that. You get a hundred percent deduction. Look at my other videos and blog articles on this topic. Which brings me to strategy number two and that is redeem all of those points accumulated while you paid for it and got a deduction in your business for personal travel. That's right. Redeem all those points for hotels and airfare for personal travel. For example, you're going to go to New York for the weekend on a personal trip. You're going to go do some shopping around Christmas time. I don't know. Use your business points that you've accumulated and redeem them for a personal trip. It's tax free income for you and you've got a write off in the process to accumulate the points in the first place. Strategy number three. Some credit cards will give you a cash rebate for points you've accumulated throughout the year while getting a deduction for it. Paying for it with your business. Well, guess what, those cash rebates are tax free as well. But there's a bonus. If you normally tithe or give money to charity, you can have those cash rebates directly sent to the charity. Now you get a tax write off for income you don't even have to claim. This is huge. You got a tax write off to build the points in the first place to get a cash rebate you don't even pay taxes on. But you you can give it to charity and get a tax write off. So don't give money to charity on income you've already had to claim. Give money to charity with these cash rebates. And if you're going to tithe or give money to charity. Anyway, direct that money over there, get the same, write off and pay no tax on that income. Now there are a lot of strategies on which credit card to use for which expense. Whole other topic. I actually recorded a podcast under my Refresh your wealth show on itunes. Go check it out. But anyway, this is a big topic for small business owners. Track those miles, track those points and make sure you're using them strategically. Thanks for listening and I hope that information was helpful. And let me speak from the heart here. I've been talking about topics like this for 1015 years. I'm a CPA attorney, best selling author, radio show host and I am passionate about helping small business owners save taxes, build wealth and protect it. Please check out the link right here. Download my free ebook on 10 Common Mistakes Small business owners make in the tax and legal arena. Also check out my social media links here. I've got Daily Tips, a weekly blog radio show every week. This information is free and I'd love to help you. Click below. Find out more about me and thanks for listening.
