Want to maximize the points and miles you earn on your business spending? Use them on personal non-deductible expenses.
We’re leaving for Paris next week and it’s got me thinking about travel.
My main business credit card is a card that earns points equivalent to 2% cash back on every purchase. I also have a secondary business card that I rarely use, but it also generates points that have the most value when used for travel. Even though that second card doesn’t have great flexibility or general points conversion, I keep it because it has other great benefits like lounge access, hotel upgrades, and some other fun perks that we both use and value.
One of the biggest mistakes I used to make when it came to using my business credit card rewards was cashing them in for legitimate business travel and expenses.
The IRS issued guidance back in 2002 that these ‘fringe benefits’ (a.k.a. your miles and points) are non-taxable personally to the business owner, but I didn't realize this until just a few years ago.
That means, if you use your points and miles to pay for a business trip that would otherwise be tax deductible, and then pay for your personal vacation using cash or your personal credit card, you are essentially losing the deduction on the covered business travel and missing an opportunity to get a tax benefit on something personal that would otherwise NOT be deductible.
I just booked this Paris by Mouth French Cheese Explosion tour over the weekend using some of my business credit card points and am SO excited.
Even if cheese in Paris isn’t your thing, using credit cards that earn points and miles on your business expenses is an easy way to get a tax benefit on whatever it is you love