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Million Mile Secrets reaer, Jason, writes:
I’m using lots of points and miles for business purposes, i.e. flying in bands for an event on miles, and putting them up in a hotel with points.
I know that some contests involving points giveaways have tax implications, so I’m assuming I can somehow deduct the value of the points as an expense? If so how could I point my accountant in the right direction?
Can Jason get a tax deduction from the award flights and hotel stays he booked for his business? Unfortunately, NO.
I’ll explain why!
Why You Can’t Deduct Business Travel Paid With Miles & Points
Disclaimer: I am NOT a tax professional, so please consult YOUR tax professional before you make any tax-related decisions.
Fortunately, the IRS does NOT assign a monetary value to miles and points! That’s great news, because I and many readers have earned millions of points over the years. If we all had to pay taxes on them, we’d owe BIG money!
Because miles have no value in the eyes of the IRS, Jason will NOT get a deduction on his taxes.
Pay With the Right Card & Save the Miles for Yourself
There are so many once-in-a-lifetime opportunities that miles and points can make a reality for you. So unless Jason is really strapped for cash, it’s better to keep the miles for his own adventures and save the cash for business expenses.
Instead, he could pay for travel, dining, and other business expenses with an American Express card and earn benefits such as:
- AMEX Simply Cash – 3% on the category you choose)
- The Business Gold Rewards Card from American Express OPEN – 3X American Express Membership Rewards points on airfare purchased directly from airlines (if you choose this as a bonus category)
- The Business Platinum® Card from American Express OPEN – $200 statement credit for airline incidentals and lounge access
Bottom Line
If you use miles and points to pay for business expenses, you won’t get a tax write-off.
And unless you are running a start-up business that’s very low on cash, you’re likely better off paying for business travel out of pocket and using your miles and points for personal travel.
Thanks for your question, Jason!
But bank fees including credit card fees are deductible as business expenses if the expense is a legitimate business expense.
Well, while not a tax professional either, I’d beg to differ in a limited circumstance.
If you purchase airline miles or hotel points with cash, I would think that the airfare or hotel night acquired via points or miles would be deductible when using THOSE points or miles.