shinobi has claimed that the IRS doesn’t care about what he’s doing, but we don’t know if he’s speaking from personal experience of being audited or not.
Right. The profits from this hustle, and I guess MS generally, are tax free at this time.
Now could the IRS review this matter in future and come up with a new approach to these profits? Of course they could. And I have no certainty as to the possibility of such a thing ensuing. I would observe the following:
When the government, any government, is in dire need of money, that entity often will review the situation and seek new sources of income through taxation of stuff which might have been, in the past, left alone.
I know the IRS is aware of MS generally and has decided, up to now, to leave it alone. The future is anyone’s guess. However:
MS implicitly profits most when turnover is highest. The “buy CDs with a CC” hustle is actually among the poorest MS opportunities in this regard, at three months (less time than that, I concede, for the really brilliant operators which I am not). Point is if the IRS changes its mind on taxation of these profits there will be plenty of opportunity for any practitioner to adjust his or her behavior accordingly.
The only remaining tax vulnerability would be taxation of past profits should thinking at the IRS change. I foresee zero likelihood of that outcome. I believe if the IRS should decide to go after MS profit they would do so, as a practical matter, on a “from this day forward” basis.
No, they are not. The IRS has never said that profits from MS are tax free. For a millionth time, the ruling mentioned above treats cash back as a reduction in cost basis. The maturity of a CD or cashing-in of a Money Order is disposition of the purchased product at a profit, because its purchase price was discounted by a rebate. The PROFIT includes that discount. And last I checked all profits were taxable.
All you are doing is justifying your own behavior to fit your desired outcome by relying on something that only sounds like it applies to your case. But I think even you understand how your logic might be flawed, so you’re pleading ignorance.
STOP CLAIMING THAT THIS PROFIT IS “TAX FREE”, because there’s no basis for this claim. Let everyone else decide for themselves whether these profits are taxable or not.
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OK, Thanks shinobi.
I joined the Justice FCU 3mo CD .20% $2500 on my Citi Double Cash Card.
Done with maturity 2/1/21. Guess I won’t get rich, but quick deal… 
No, I will not. The profits are tax free. Deal with it.
You may not post descriptions of methods for breaking any law on this site.
Your claim of these profits being “tax free” is not a settled matter, and may lead people to break the law (under-reporting income).
I believe your insistence on continuing to make this claim is violating the site rules.
Further, it would be in everyone’s interest to follow the first rule of Fight Club. Just post your deal and keep quiet about claims you can’t prove.
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Tax evasion is illegal.
This is a finance site, we mostly talk about finance deals. We don’t talk about breaking the law, never have.
I don’t know why you’ve just tried to bring your politics into this – keep that in the political thread.
Look. If you think by hiding my posts you can change anything, think again. All that does is testify to your cowardice and unwillingness to engage in dialogue. But it does not make your thinking right . . . because nothing can do that.
I realize shutting down speech you dislike is the California way. Here where I live we have more courage than that and we are not cowards. Do whatever you want. You will still be wrong on this issue.
I’m not hiding your posts. I tried to engage with you. You seem to be on edge and everything is about politics for you now. This is a finance thread, keep it politics-free.
I explained why you might be wrong. Regardless of what opinion everyone holds and what they do in their own situation, many, if not most users here (and related blogs and websites) at least agree that taxation of MS profits is not a settled topic. Stop being so stubborn and stop making false claims that could create trouble for some people. It does not add any value to the discussion.
Well, somebody did. Sorry for the accusation if it was not you. Those who do so are able to shield their cowardice in anonymity on this site. This is wrong but not under my control.
Look, several years ago I investigated this. Found posts by MSers who spoke directly with the IRS. The IRS simply had no interest in the issue of MSing vis a vis taxation.
As I wrote above, this certainly could change going forward. But for now it’s all good.
I do understand how important taxation is generally in California. It’s one of many reasons I would never live there. When you spend more money than you have, that is how it works.
OK, now another one of my posts has been hidden, if not by you then by your liberal friends. We cannot have a dialogue under these circumstances.
And incidentally, in all the time I have been on this website I have never requested any other participant’s post be hidden regardless I have disagreed with a great many of 'em. Doing so is how communists behave. It’s not how we Americans operate.
See ya
Great, so this is your own personal excuse. But there is no official written rule. There isn’t even a private letter ruling that applies to you personally or to anyone else as far as we know. All you can do is present your best evidence (as you have) and I can present my best evidence (as I have) and let the readers draw their own conclusion.
Again you bring California into it, as if it is somehow related. I never told you or anyone else what I do with my own MS profits. For all you know I do the same thing as you, but I’d never share this information, nor would I ever encourage others to do the same without a clear written ruling on the subject. Like I said before, it’s best for everyone to follow the first rule of Fight Club.
I see what you’re talking about – your posts are temporarily hidden but they can still be viewed. Those hidden posts do not contribute to this dialogue – you didn’t explain or add anything, just attacked me personally for expressing a different opinion. They were probably flagged for either being off-topic or for violating site rules, not because someone “disagreed” with you.
I doubt you are correct. It is commonplace for liberals here to endeavor to hide posts which offend them. But again, if you did not do it I apologize for having accused you.
Heck, if I tried to hide posts here which offended me I would need to eradicate tens of other people’s posts. There is no fun for me in doing that. Everyone should be allowed to express themselves without harassment. But that is not how it works in, for example, San Francisco. People with Conservative views there get shouted down.
This site has clear rules which you should review often, because you often forget them. Here are just a few:
- You can criticize ideas, not users.
- No name-calling or ad hominem attacks.
- Be civil. Don’t post anything that a reasonable person would consider offensive, abusive, or hate speech.
- You may not post descriptions of, links to, or methods for stealing someone’s intellectual property (software, video, audio, images), or for breaking any other law.
Express away, just don’t break the rules.
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Look, you are saying that you have done your research and made a good faith effort to figure out what’s right. Whatever the IRS decides, now or in the future, you have a solid defense as far as the potential criminality if your conclusions dont match the IRS’s conclusions.
But if I’m ever audited, “Yeah, my buddy shin said I didnt have to claim it” isnt going to give me the same cover. I need to make my own good faith effort to determine the correct tax treatment. Your opinion and conclusions can certainly be part of what I consider when developing my own, but you are stating it as fact when it is not. No matter how confident you may be that you are right, it’s just an opinion - and your opinion isnt the one with the power to start sending tax deficiency notices. That’s all anyone is getting at.
You should take a breath. Outside of the election thread(s), we are all on the same side.
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Our current commander in chief partially won the last election when he interrupted Hillary and explained how he was smart to have paid less in taxes than he really should have. People do far worse on a regular basis when they truly earn income(say $50 for mowing their neighbor’s lawn) and don’t report it. We have guidance on that from the IRS and yet it happens almost constantly and the IRS has no interest in going after small fish. Now on MS’ing to earn additional income, there’s no guidance from the IRS and I have to agree with shinobi that there’s virtually no risk. I don’t think this is worth 20 posts to argue over.
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Yes, we all agree on this, except shinobi, who read a post by some anonymous poster online who claimed to have spoken to IRS directly.
I also agree that there’s virtually no risk, but that is not what shinobi says. He keeps insisting that it is “tax free”. “No risk” is not the same as “virtually no risk”.
There’s probably less than half a percent chance of getting caught doing any old underreporting, because IRS has had their budget cut for years and spends most of its resources on frying bigger fish. So all sorts of law breaking is “virtually no risk”. Until you get caught, that is, since there’s no statute of limitations on tax fraud. And I’m not saying this rises to the level of “fraud,” but it could probably be argued that way.
Just made another quick deal. Sun East FCU 3mo CD .10% $3000 mature 2/2/21.
My Double Cash Card is in BIG business this month. Property Tax, Vehicle Renewal (3 auto’s) 3mo CD’s + regular bills. Should get another big cash back check from CC. 
You guys are making a big deal over Income Tax situations.
Not me, I just accept the 1099’s that come in & that can be sizeable. The interest receipts will still be high for some time because most CD’s purchased rate 3-4%… Sure adds up…
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It might be worth looking for cards with big sign-up bonuses that have high minimum spend requirements. DoC has a list: Best Current Credit Card Sign Up Bonuses & Offers For November, 2020 - Doctor Of Credit.
There are a few 2%+ cards on there that might be worth your while if you are willing to redeem on travel or pay an annual fee.
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Yup. I do the same thing.
You might want to consider applying for a Discover Miles credit card, pattyb53, provided it would be your first time having that card.
If you can obtain a Discover Miles card it will pay you a 3% reward for the first year, going down to a 1.5% reward thereafter. I’m already past that first year with my own Discover Miles card. But I made a tidy amount of money during that first year, and I still charge to the card from time to time. The Discover reps are very easy on their cardholders . . . very fair. And they are all in the USA.
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