Could your frequent flyer miles be taxable?

botti
Karen Botti, CPA

Now is the time of year when many Americans are using the frequent flyer miles they’ve built up from work-related travel or credit card rewards programs to take the family on a nice vacation. If you’re among them, you may be wondering if those miles could be taxable.

Fortunately, in most cases the answer is “no.” As a general rule, miles awarded by airlines for flying with them are considered nontaxable rebates, as are miles awarded for using a credit or debit card.

But there are exceptions, so it’s a good idea to review your awards for potential tax liability. Types of mile awards the IRS might view as taxable include miles awarded as a prize in airline sweepstakes and miles awarded as promotions. The value of the miles for tax purposes generally is their estimated retail value.

If you’re concerned you’ve received mile awards that could be taxable, please contact us and we’ll help you determine your tax liability, if any.