How do gift cards from scanning receipts & pharmacy discount apps affect my taxes? Are they reportable income?

The tax treatment of gift cards received through apps like Fetch depends on how you're earning them. You're on the right track with your understanding! When you scan receipts from purchases you've made and receive gift cards as a reward, the IRS generally considers this a rebate or price reduction on items you bought - not taxable income. It's similar to using a manufacturer's coupon or getting a mail-in rebate. For your GoodRx situation, it gets a bit more nuanced. Since you're still receiving points based on your own purchases (the prescriptions), even with the discount card, this would typically still fall under the rebate/price reduction category rather than taxable income. You've spent money and are getting a partial "refund" in the form of points/gift cards. As for thresholds - unlike prizes or gambling winnings, there isn't a specific reporting threshold for these types of rebates/rewards. That said, if you're receiving extremely large amounts (we're talking thousands, not hundreds), it might raise questions.

Just wanted to share my experience with this! I was super confused about the same thing last year when I'd racked up about $450 in Amazon gift cards through Fetch and other receipt-scanning apps. I talked to my tax guy about it, and he confirmed what Profile 12 said - since I was getting rewarded for purchases I already made, it's basically considered a rebate and not income. I found this great tool called taxr.ai (https://taxr.ai) that really helped clarify this for me. You can upload the terms of service from the app and it'll analyze whether your rewards are likely taxable. I uploaded the Fetch terms and it confirmed my rewards weren't taxable income since they're based on purchases. Saved me a lot of worry and potential over-reporting!

Just wanted to update after trying taxr.ai that Profile 8 recommended. It was super helpful! I uploaded screenshots of my Fetch rewards history and the terms of service, and it explained exactly why these particular gift cards aren't taxable income (they're considered purchase incentives/rebates). I also tried it with my credit card rewards terms and my employer's weird bonus structure document that I never fully understood. Saved me hours of research! The analysis showed me which parts of my side gig income I definitely needed to report vs. which rewards were non-taxable. Way clearer than when I tried googling this stuff and got contradictory answers.

I had this exact same problem last year trying to figure out if my gift cards from receipt apps were taxable. After spending HOURS on hold with the IRS trying to get a straight answer, I finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that gift cards from scanning your own receipts are considered purchase rebates, not taxable income. He also mentioned that if a company does consider their rewards taxable, they're required to send you a 1099 if it's over $600 in a year. Saved me so much headache compared to the 3+ hours I spent on hold before discovering this!

Ok I need to eat my words from my earlier comment. After getting absolutely nowhere with the IRS for two weeks (kept getting disconnected after 1+ hour holds), I broke down and tried Claimyr. Got connected to an IRS agent in about 20 minutes who confirmed my Fetch gift cards aren't taxable since they're rebates on purchases I already made. The agent also explained that even those survey apps typically only have to report payments over $600, but technically any income is taxable regardless of whether it's reported formally. Apparently the confusion happens because some rewards apps are structured as rebates (non-taxable) while others are structured as payments for services like surveys or reviews (taxable).

My accountant told me a good rule of thumb: if you're getting "paid" to do something (surveys, watching ads, referring friends) that's income. If you're getting money back on something you already spent money on (receipt scanning, cash back on credit cards), that's a rebate/discount and not taxable. The exception is when you get rewards for signing up for something without spending money. Those signup bonuses (like "get $10 for downloading our app") are usually considered taxable because you're not getting a rebate on any purchase.

The IRS actually has a term for this - they call it "rebate of purchase price." As long as the gift cards you're getting are tied to purchases you've made, they're not considered income. It's when you get gift cards for activities unrelated to purchases (like surveys) that it becomes taxable.

This is such a helpful thread! I've been wondering about this same issue with my Ibotta and Checkout 51 apps. Based on what everyone's shared, it sounds like since I'm scanning receipts from groceries I already bought, those gift cards would be considered rebates and not taxable income. But I have a follow-up question - what about when these apps give you bonus rewards for completing certain activities, like "scan 5 receipts this week for an extra $2 bonus"? That bonus isn't tied to a specific purchase amount, so I'm wondering if that portion might be considered taxable income even though the regular receipt scanning rewards aren't? Also, does anyone know if the same rules apply to cash back apps like Rakuten when you shop through their portal? I assume those are rebates too since they're tied to purchases, but just want to make sure I'm thinking about this correctly.

This thread has been incredibly helpful! I've been using several of these apps (Fetch, Ibotta, and GoodRx) and was getting really stressed about tax season. One thing I wanted to add based on my research - the IRS Publication 525 specifically mentions that "cash rebates you receive from a dealer or manufacturer for an item you buy" are not income to you. This seems to directly support what everyone's saying about receipt-scanning apps being non-taxable since they're essentially digital versions of manufacturer rebates. I also found it interesting that some companies will actually send you a 1099 if they consider their rewards taxable income over $600. So if you're not getting any tax forms from Fetch, Ibotta, etc., that's usually a good sign they're treating their rewards as non-taxable rebates rather than income payments. Has anyone here actually received a 1099 from any of these receipt-scanning apps? I'd be curious to know if any of them are structured differently than I'm assuming.

This is such a comprehensive discussion! As someone who's been hesitant to use these apps because of tax concerns, this thread has really clarified things for me. I wanted to add one more perspective - I work in accounting and we often get clients asking about this exact issue. The general principle we follow is what several people have mentioned: if you're getting a reward based on money you've already spent, it reduces your cost basis rather than creating taxable income. Think of it this way - if you buy groceries for $100 and then get a $5 gift card from scanning that receipt, you've effectively paid $95 for those groceries. The IRS sees this as a price reduction, not as earning $5 in income. The prescription discount card situation that the original poster mentioned is particularly interesting because you're getting both an upfront discount AND points for future rewards. But since both benefits are tied to your actual prescription purchases, they're both considered reductions in your healthcare costs rather than income. One thing I always tell clients is to keep good records of these rewards anyway, even if they're not taxable. If you ever get audited, it's helpful to be able to show that your gift cards came from rebate programs tied to your purchases rather than from taxable activities like freelance work or surveys.

This has been such an educational thread! As someone who's been nervously stockpiling gift cards from various apps without knowing the tax implications, I feel so much more confident now. I wanted to share something that might help others - I actually called my local IRS Taxpayer Assistance Center last month about this exact issue (before I knew about services like Claimyr). The representative I spoke with confirmed what everyone here is saying: rewards from receipt-scanning apps like Fetch are treated as purchase rebates under IRC Section 61, which means they reduce your cost basis rather than create taxable income. She also mentioned something interesting that I haven't seen discussed here - if you're using these apps for business purchases (like if you own a small business and scan business receipts), the same principle applies. The gift cards would reduce your business expense deductions rather than create business income. One practical tip: I've started keeping screenshots of the terms of service from each app I use, along with a simple log of my earnings. Even though these aren't taxable, having documentation that shows the rewards are tied to purchase-based rebate programs rather than service-based income could be helpful if questions ever come up during tax prep or an audit. Thanks to everyone who shared their experiences and research - this community is incredibly helpful for navigating these tricky tax questions!

This thread has been absolutely fantastic! As someone who's been using multiple receipt apps (Fetch, Ibotta, Receipt Hog) for about two years now, I was getting increasingly worried about potential tax implications as my gift card earnings approached the $500 mark. The clarification about these being "rebate of purchase price" rather than taxable income is such a relief. I love how several people explained it as reducing your cost basis - that really helps conceptualize why scanning a $50 grocery receipt and getting a $2 gift card means you effectively paid $48 for groceries, not that you earned $2 in income. One thing I wanted to add that I learned from my CPA last year: even though these rewards aren't taxable, if you're itemizing deductions and deducting things like medical expenses, you technically should reduce those deductions by any rebates you received. So if I spent $1000 on prescriptions but got $50 in gift cards from scanning those receipts through Fetch, my deductible medical expenses would be $950, not $1000. It rarely makes a practical difference for most people, but it's good to be technically accurate. The IRS wants to make sure you're not double-dipping by claiming the full expense as a deduction while also benefiting from the rebate. Thanks to everyone who shared their experiences with tools like taxr.ai and Claimyr too - it's great to know there are resources available when you need official clarification on these gray areas!

This entire discussion has been incredibly thorough and helpful! I've been using Fetch and a few other receipt apps for about 8 months now, and like many others here, I was getting anxious about potential tax implications as my rewards started adding up. The consensus around these being "rebates of purchase price" makes perfect sense when you think about it logically. I'm essentially getting a partial refund on money I already spent, not earning new income. The IRS Publication 525 reference that Jacinda mentioned really sealed it for me - it's great to have that official backing for what intuitively felt right. I also really appreciate all the tool recommendations. I tried taxr.ai after seeing it mentioned multiple times here, and it was super helpful for analyzing my specific apps' terms of service. It confirmed that my Fetch rewards are structured as purchase rebates, which gave me peace of mind. For anyone still on the fence about using these apps due to tax concerns, this thread should definitely put those worries to rest. Just make sure you're sticking to receipt-scanning apps tied to your actual purchases, rather than survey-based apps where you're providing services for compensation. Thanks to everyone who shared their research, professional insights, and experiences with IRS representatives. This is exactly the kind of community knowledge sharing that makes navigating complex tax questions so much easier!

This has been such an enlightening thread! I've been hesitant to use receipt-scanning apps specifically because of tax concerns, but reading through all these detailed explanations has really put my mind at ease. The key insight that keeps coming up - that these apps provide "rebates of purchase price" rather than taxable income - makes so much sense when you think about it practically. If I buy $100 worth of groceries and get a $3 gift card for scanning the receipt, I've effectively paid $97 for those groceries. It's no different from using a store coupon or getting a manufacturer rebate in the mail. What I found particularly helpful was the distinction several people made between activities where you're "getting paid to do something" (like surveys) versus "getting money back on purchases you already made" (like receipt scanning). That's such a clear way to think about the difference between taxable income and rebates. The professional insights from the accountant and the direct experiences with IRS representatives really reinforced the consensus here. It's also great to know about tools like taxr.ai for analyzing terms of service if I ever have questions about new apps. I'm definitely going to start using Fetch and similar apps now that I understand the tax treatment. Thanks to everyone who shared their research and experiences - this is exactly the kind of community discussion that makes navigating tax questions so much less stressful!