I'm Now Earning 3%+ On All/Most Purchases

That just might be it. I thought I was being smart by applying in January, thinking it would give me more time to spend the final travel credit.

I also didnā€™t call out, but the example assumed the calendar year setup. With the new setup, you can pick any month and apply on the 2nd and have about a week to (theoretically) get a 2nd travel credit before the 2nd AF posts. I say theoretically, because I donā€™t know for sure when they ā€œstartā€ the next one with the new cardmember-year setup. They might have been smart and started it when the next AF posts on a 1st of the month, or changed the new AFs to post on the first day rather than the 1st of the monthā€¦

They also took more than a week (maybe even 10 days) to get me the card in November 2016. 10 days from approval to receiving card makes the timings tighter. But, you could conceivably move your statement date manually from the end of December to the beginning of December (for the 2nd year) and gain some extra days.

You could also downgrade it and get a pro-rated annual fee refund. Not exactly one annual fee for 3 credits but it would be close.

[quote=ā€œTripleB, post:10, topic:2632, full:trueā€]
I am not an accountant but I think thatā€™s debatable. Thereā€™s no 1099 issued for the travel credit.[/quote]

Itā€™s not debatable really. The debatable part involves how to treat rewards. But thatā€™s not really the question here. If you use the 300 for personal travel, itā€™s 300 of income to you ( assuming you are in fact allowed a deduction for the annual fee). If you use it for business travel, your deduction for that business travel is reduced by 300. This is true unless youā€™re taking the position that the 300 is income to the business upon payment of the annual fee (or the deductible expense of the annual fee is 150).

Itā€™s very difficult to win an ā€œis this incomeā€ case against the IRS when the IRS has logic/fairness on their side. And even when it doesnā€™t.

Iā€™m not sure Iā€™d classify it that way, but if thatā€™s how you classify it, then it would reduce the deduction for the annual fee down to 150.

That appears to be the manner in which the IRS believes you should treat the transaction. But if you disagree with the IRS there are other potential ways to treat the cash back, but at only 2k of cash back it probably isnā€™t worth analyzing the effects of treating it a different way. The basic tax will stay the same (either 98k deduction, or 100k deduction and 2k income).

You can also get the Citi Costco card if you have a Costco membership. Same 3% on travel (hotels, airfare, etc.), 3% on restaurants and 4% on gas.

3% thankyou pesos <> 3X UR. Thereā€™s also no opening bonus for the costco. So the opportunity cost is very high. You have to run through $100ks of charges to make up for the $1500+ profit from the first year of the CSR (with the 100k points original offer)

Or similar absurd amounts of 3% citi charges if you qualify with business cards and can get the Ink Preferred for 80k+20k points ($1500) and only a $95 fee.

Citi Costco gives back cash, not TYP, and TYP can be better than cash with TY Premier, but otherwise youā€™re right. Although ARM was comparing Costco to Uber when saying ā€œsame 3%ā€.

1 Like

Dā€™oh my mistake. Yeah I havenā€™t had luck with Citi but I think they do have a couple better rate transfer options (mainly krisflyer I think?) if you have a paid card. I hadnā€™t realized the costco variant doesnā€™t even give TYP option. For me that makes it even weaker vs the value I get from UR.

They keep locking me out of ever considering TY Premier (by converting my other card(s) to a TY Preferred every other yearā€¦ resetting the 2yr limit for open/close). So the best I can do is fairly crappy gift cards (like Home Depot/sears, etc), it wasnā€™t worth the pain to try the mortgage check. But I get them back with enthusiastic use of the Price Rewind benefits. I think the 180000 TYP I had accumulated from spending at one point has gone down to about 60k now, I had to redeem some last several decembers before they expired.

1 Like

How does the IRS know that I got a $300 travel credit or 2% cash back on my credit card?

They donā€™t until they audit you. And even then, thereā€™s no guarantee theyā€™ll find it.

4 Likes

Same way they know you paid a $450 AF.

They know you paid a $450 annual fee because you deducted it. If you donā€™t book the $300 travel credit as a rebate against the charge it pertains to, theyā€™ll never know (until they audit you)

Iā€™m disagreeing with your conclusion on how itā€™s treated. Iā€™m not talking about how and if someone would get caught if they mischaracterize and/or donā€™t report income/ over report expenses.

People seem to have this impression that auditors are morons. While they may not be forensic accountants they are generally competent.

5 Likes

My point was that they only know if you tell them.

1 Like