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Are frequent flier miles taxable? Citibank says so. The bank has begun sending its customers tax forms that document the total dollar amount of miles as miscellaneous income. For those tallying the cost, Citibank is valuing each mile at 2.5 cents. This practice is unheard of by most tax experts and the IRS hasn’t said those miles are taxable…yet, but the uncertainty surrounding the tax issue could potentially affect millions of people and make them more vulnerable to audits. What’s the final word on miles? The answer may make you think twice next time you opt to receive “bonus” frequent flier miles as a perk for using your credit card or opening a new bank account.

WEIGH IN:

Do you treat your frequent flier miles as taxable income? What’s your reaction to Citibank sending tax forms to customers regarding their frequent flier miles? How should the IRS deal with this issue?

Guest:

David Lazarus, business columnist, Los Angeles Times

Selwyn Gerber, CPA, founder, Gerber & Co., Inc.