Taxability of Frequent Flyer Miles

Article Posted on 07/25/2019

Employees who travel for business on behalf of their employer may earn frequent flyer miles which can be exchanged for free or discounted travel, upgraded seating or other travel services.  At times, these miles may be used for the employee’s personal travel even though the employer paid for the business trip. 

Fortunately, the IRS has ruled that these travel benefits are not taxable to the employee.  No income tax or payroll tax is due on these transactions.  However, frequent flyer mileage earned for business trips and converted to cash by the employee is treated as a taxable fringe benefit and is subject to both income tax and payroll tax. 

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