Frequent Flier Miles

Whether you travel on business or for pleasure, you can build up frequent flier miles that can be cashed in for fares or upgrades. You can also earn frequent flier miles by charging goods and services to special credit cards that award mileage. Fortunately, there may be no tax cost to you for using frequent flier miles.

You are not taxed on the value of frequent flier miles you earn on business travel and use for personal travel. For example, you earn enough points on your business travel throughout the year to receive free tickets for your summer vacation. You are not taxed on the frequent flier miles as they accrue, and you are not taxed when you use them for travel benefits-business or personal. The IRS, for the moment, has given up trying to tax this benefit because it is too difficult to assign a value to it. There is no dollar limit to the amount of this benefit that you can exclude from income.