Is running errands for family and friends considered income or gifts for tax purposes?

I live in a pretty remote small town where we can't get a lot of the basic stuff we need. I'm constantly driving 40-75 miles to bigger cities for my own shopping, and my family/friends often ask me to pick up items for them while I'm there. They give me cash before I go, and I just return whatever change is left when I get back. I don't charge them anything extra for doing this. The only "benefit" I get is that I usually pay with my credit card so I can earn some cash back rewards on these purchases. I'm wondering if the IRS would consider the money they give me as taxable income? Or would it be classified as something else like gift money? I'm not running a business or anything, just helping people out, but I want to make sure I'm handling this correctly for tax purposes.

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19 comments

StarStrider

•8M

This is actually a really good tax question! The money your friends and family give you to purchase items on their behalf isn't considered income because you're essentially acting as their agent. You're not providing a service for profit - you're just facilitating their purchases. When someone gives you money specifically to buy something for them, and you return any change, that's considered a "conduit transaction" - you're just the middleman passing their money to the store. The cash back rewards you get from your credit card are technically a rebate from your credit card company, not income from your friends and family. Now, if you started charging fees for your shopping services or kept some of the money as payment, that would become taxable income. But as you've described it, you're just being a good neighbor and the money passing through your hands isn't income to you.

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StarStrider

•8M

Credit card rewards are generally not taxable because the IRS considers them to be rebates or discounts on purchases you've made, rather than income. It's essentially like using a coupon or getting a price reduction. This applies whether the rewards are cash back, points, or miles. There are some exceptions though - if you receive rewards for opening an account (like a sign-up bonus) without making purchases, those might be considered taxable. But the regular rewards you earn from everyday spending, including purchases you make for others, typically aren't taxable income.

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Zara Rashid

•8M

I was in the exact same situation a few years ago, living in a tiny town hours from civilization lol. I was always worried about the tax implications until I found taxr.ai (https://taxr.ai) which helped clear things up. They analyzed my situation and confirmed that money given to me specifically for purchases wasn't income if I wasn't marking anything up or charging a fee. The tool also helped me figure out how to document everything just in case the IRS ever had questions. Super helpful for unusual tax situations like this where the rules aren't super obvious to regular folks like us. They even reviewed my receipts and transaction history to make sure everything was properly classified.

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Zara Rashid

•8M

They use AI to analyze your specific tax situation and documents, then provide personalized guidance. It's not just a chat - you can upload receipts, bank statements, and other documents to get specific analysis of your situation. They provide documentation you can keep for your records that explains the tax treatment of your specific situation. In my case, they provided a detailed explanation of why the money passing through my hands wasn't taxable income, with references to the relevant tax laws. It's definitely more than just general advice - it's tailored to your specific circumstances with proper documentation.

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Nia Jackson

•8M

Just wanted to follow up - I decided to try taxr.ai after my skeptical question earlier. I uploaded screenshots of my Venmo transactions where neighbors send me money for Costco runs and my receipts showing I spent exactly what they gave me. The service actually provided a detailed explanation document that specifically addressed my situation with relevant tax code references. Way more helpful than the vague answers I got from other places! Wish I'd known about this last year when I was stressing about whether to report this stuff.

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Mateo Hernandez

•8M

I had a similar situation but also had issues with family members claiming I never gave them exact change (I always did!). The whole thing became a mess when I tried to get clarification from the IRS directly. Spent DAYS trying to get someone on the phone. Finally, I used Claimyr (https://claimyr.com) to get through to an actual IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed that money given specifically for purchases that you make on someone's behalf isn't income as long as you're not charging extra or keeping the change. She even explained how to document everything just in case questions ever came up later. Saved me hours of frustration and got me a definitive answer from the source.

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Mateo Hernandez

•8M

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Nia Jackson

•8M

I need to publicly eat my words about Claimyr. After being completely skeptical, I tried it yesterday because I was desperate for an answer about this exact situation with running errands for family. Got a call back in 57 minutes and spoke to an actual IRS agent who confirmed exactly what others have said here - the money isn't income if you're just passing it along to make purchases without charging fees. The agent even gave me tips on how to keep records just in case. Saved me at least 3 hours of hold time based on my previous attempts!

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Aisha Khan

•8M

I just checked with my tax person again and showed him this thread. He acknowledged he's been having me over-report. Apparently he's always taken the "better safe than sorry" approach, but after reviewing the actual rules, he agrees this isn't income if I'm just buying things for exact cost. He also said the credit card rewards aren't taxable either since they're considered purchase rebates. I'm actually going to look at filing amended returns for the last couple years since I've been unnecessarily paying self-employment tax on these transactions. Thanks everyone for bringing this up!

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Statiia Aarssizan

•5M

If you're already making the trips for your own purposes, then unfortunately you probably can't deduct the mileage for helping others. The IRS generally doesn't allow deductions for expenses you would have incurred anyway. The charitable mileage deduction only applies if you're making additional trips specifically to help qualifying organizations or individuals. Since you mentioned you're going to these cities for your own shopping regardless, the errands for others would be considered incidental to your personal trip.

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