Are Reward App Earnings Taxable? What You Need to Know

Do I Have to Pay Taxes on Reward App Earnings?

The short answer: In the United States, technically yes—all income is taxable. But whether it matters practically depends on how much you earn.

Disclaimer: This article provides general information, not tax advice. Consult a tax professional for your specific situation.

The Basic Rule

In the US, the IRS considers income from reward apps as taxable income. This includes:

• Cash from PayPal redemptions
• Gift card values
• Cryptocurrency received

Whether it's $5 or $500, it's technically income.

When Platforms Report to the IRS

The 1099 Threshold

Platforms are required to send you (and the IRS) a 1099 form if you earn $600 or more in a calendar year from that single platform.

Important: Even if you don't receive a 1099, you're still technically required to report the income.

What This Means for Casual Users

Most casual reward app users earn $50-200/month, or $600-2,400/year. If you're under $600 from a single platform:

• You won't receive a 1099
• The IRS won't have a record from the platform
• You're still supposed to report it

Reality check: Many casual earners under $600/platform don't report this income. We're not advising this—just acknowledging reality.

What This Means for Heavy Users

If you earn $600+ from a single platform in a year:

• You WILL receive a 1099
• The IRS WILL have a record
• You MUST report it to avoid issues

How Reward App Income Is Taxed

It's "Other Income"

Reward app earnings typically fall under "other income" on your tax return (not self-employment income, usually). This means:

• No self-employment tax (15.3% savings)
• Taxed at your normal income tax rate
• Reported on Schedule 1 of Form 1040

Your Tax Rate

Your reward app income is added to your other income and taxed at your marginal rate:

For most reward app users, you're looking at 10-22% on your earnings.

Example Calculation

You earn $1,200 from reward apps in a year. Your regular job puts you in the 12% tax bracket.

Tax owed on reward app income: $1,200 × 12% = $144

That $1,200 becomes ~$1,056 after taxes.

Gift Cards vs. Cash

Are Gift Cards Taxable?

Yes. The fair market value of gift cards is income. A $10 Amazon gift card = $10 of income.

Is There a Practical Difference?

Not for tax purposes. The IRS treats $10 in PayPal the same as a $10 gift card.

However, platforms typically only track and report based on points redeemed, not the specific reward type.

Cryptocurrency Considerations

Bitcoin/Crypto Is Taxable

If you cash out to Bitcoin:

1. At receipt: The USD value is income (same as gift cards)
2. If you sell later: Any gain/loss is a capital gain/loss

Example

You receive $100 in Bitcoin when BTC is at $50,000.

• Income: $100 (taxable as income)

Later, you sell that Bitcoin when BTC is at $60,000. Your BTC is now worth $120.

• Capital gain: $20 (taxable as capital gains)

Crypto adds complexity. Consider this if choosing Bitcoin payouts.

Record Keeping

What to Track

Even if you don't receive a 1099, keep records:

• Total points earned per platform
• Total USD value redeemed
• Dates of redemptions
• Screenshots of transaction history

Why Keep Records?

• Supports your tax filing
• Useful if IRS questions income
• Helps track across multiple platforms
• Required if you're audited

Simple Tracking Method

Create a simple spreadsheet:

Total quarterly and annually.

State Taxes

Don't forget state income taxes (if your state has them). Reward app income is typically taxable at the state level too.

Some states with no income tax: Texas, Florida, Washington, Nevada, and a few others.

Common Questions

"I only earn $50/month. Do I really need to worry?"

At $50/month ($600/year), you're right at the 1099 threshold for a single platform.

Technically: Yes, you should report it. Practically: If you're under $600 and don't receive a 1099, enforcement is minimal. Our advice: Report it to be safe, especially if you're close to or over $600.

"I use multiple platforms. Does that matter?"

Each platform reports separately. If you earn:

• $400 from ggbucks
• $300 from Swagbucks
• $200 from Freecash

No single platform hits the $600 threshold, so no 1099s issued.

However, you've earned $900 total, which is still income you should report.

"What if I spend the gift cards immediately?"

Doesn't matter. The income is recognized when you receive the gift card, not when you spend it.

"I'm a teenager. Do I file taxes?"

If you have no other income and earn under the standard deduction (~$14,600 in 2024), you likely don't need to file. But if you have other income (summer job, etc.), reward app earnings add to your total.

Consult a parent or tax professional.

"What if I earned a lot and didn't report in past years?"

You can file amended returns for past years. If you owe, pay what you owe. The IRS prefers you come forward rather than waiting to be caught.

Consider consulting a tax professional if amounts are significant.

"Can I deduct anything?"

Generally, no—you're not self-employed, so you can't deduct expenses.

However, if you somehow treat this as a business (unlikely for most users), different rules apply. Consult a tax professional.

"Do other countries have similar rules?"

Tax rules vary by country. This article focuses on the US. If you're outside the US, research your local tax laws or consult a local tax professional.

What ggbucks Does

We Track Your Earnings

Your account shows:

• Total points earned
• Redemption history
• Transaction dates

You can use this for record keeping.

We Report When Required

If you redeem $600+ in a calendar year, we'll:

• Request tax information (name, address, SSN/TIN)
• Issue a 1099-MISC or 1099-NEC
• Report to the IRS

We Don't Provide Tax Advice

We can tell you how much you earned. We can't tell you how to file. That's between you and a tax professional.

Practical Advice

For Casual Earners (<$600/platform)

• Keep basic records
• Consider reporting (technically required)
• Don't stress excessively—amounts are small

For Moderate Earners ($600-2,000/year)

• Definitely keep records
• Expect 1099s if over $600/platform
• Set aside ~15% for taxes (to be safe)
• Report on your tax return

For Heavy Earners ($2,000+/year)

• Meticulous record keeping
• Expect 1099s
• Consider quarterly estimated taxes
• Consult a tax professional
• Set aside 20-25% for taxes

The Bottom Line

Is reward app income taxable? Technically, yes—all income is taxable in the US.

Will you get in trouble for small amounts? Enforcement on small, unreported amounts is minimal, but it's still technically required.

What should you do?

1. Keep records of earnings
2. If you receive a 1099, definitely report
3. If you're under $600/platform, consider reporting anyway
4. Consult a tax professional for complex situations

Reward apps are legitimate income. Treat them accordingly.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for advice specific to your situation.