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Does the IRS consider cash back as a part of the total contributions to your Roth IRA account?

I have a credit card associated with an investment company that automatically puts cash into my investment account. Previously, I was depositing the amount into a Roth IRA account. This may result in exceeding the contribution limit for 2017. However, the investment company was not counting the cash back as contributions towards the total amount. According to the IRS, cash back is not taxed as income. Is this because it is technically a discount or refund? Should the cash back count towards the total amount?

Investing, IRAs, Taxes
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February 2018

You are correct about that the cash back from your credit card is usually not considered as taxable income. It is generally considered as a discount or a rebate. You could learn more about this from another question on Investopedia here

Here is the contribution limit rule to Roth IRAs directly from IRS Publication 590A. 

"Roth IRAs only. If contributions are made only to Roth
IRAs, your contribution limit generally is the lesser of:

$5,500 ($6,500 if you are age 50 or older), or

Your taxable compensation.

However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained
later under Contribution limit reduced."

For example, if you have $4,000 taxable compensation and $200 cash back from your credit cards, you can only contribute up to $4,000 to your Roth IRA since the cash back is not considered as taxable compensation in the first place. 

On the other hand, if you have $10,000 taxable compensation and $200 cash back from your credit cards, you can only contribute up to $5,500 ($6,500 if you are age 50 or older) to your Roth IRA, not $5,700 ( $5,500 + $200). 

Hope it helps. 

February 2018