Airline Miles

Today TaxMama hears from Rachel in the TaxQuips Forum, who did something clever. “If I booked a ticket for a friend of mine with my airline points and I was paid the value of the ticket, is that considered taxable income? If so, which line would I put it on the 1040?”

Hi Rachel,

The airline miles are free to you.  

But you’re right.  Selling them is a taxable event.

Since you’re not in the business of selling airline tickets, you don’t need to treat it as business income. Just report it on Line 21 of your Form 1040 as Other Income (not subject to self-employment taxes).

 I hope she enjoys the trip.

 And remember, you can find answers to all kinds of questions about airline miles and other tax issues, free. Where? Where else? At www.TaxMama.com.

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