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Deducting Credit Card Reward Donations

Posted By Jim On 09/21/2010 @ 7:07 am In Taxes | 5 Comments

For years I’ve been accumulating reward points in Citi’s Thank You Network [3] with my Citi mtvU credit card [4], usually turning them into student loan checks for ACS. With my student loans paid off and the conversion rate weaker (it used to be 2,500 point for $25, now it’s 3,300 for $25), I’ve been looking for an alternative in the gift card department. Unfortunately, none of the cards are really appealing and I thought we could convert the points into a charitable donation but I wasn’t sure how the deduction worked.

It turns out that it’s actually quite simple. As long as the charity is eligible (most of the ones listed in reward catalogs are eligible), you can deduct the donation as long as you’ve kept the necessary documentation and it has a cash value. If you donate airline miles, you can’t deduct it because they have no cash value. If you convert airline miles into a cash amount and that amount is donated, then you can deduct it.

If you want to find out more, you can check out this letter ruling by the IRS [5] from July that explains everything.


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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/deducting-credit-card-reward-donations.html

[3] Citi’s Thank You Network: http://www.bargaineering.com/articles/citi-thankyou-network-rewards-review.html

[4] Citi mtvU credit card: http://www.bargaineering.com/articles/cards/citi-mtvu.php?tag=deductDonations

[5] letter ruling by the IRS: http://www.irs.gov/pub/irs-wd/1027015.pdf

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