Earning Virtual Currency on your Credit Cards

ptorrone wrote to mention an article on the MAKE blog, where the author theorizes that perhaps someday instead of frequent flyer miles we'll get WoW gold or EQ plat as a reward for using our credit cards. From the article: "It's not a matter of if, just when - credit card companies, Pay Pal, Amazon, eBay and the individual "gaming" companies eventually bridge the real and virtual currencies with loyalty programs and private label credit cards - there's too much money out there to -not- to do this. This 'demographic' is the battleground. The more you spend, the more you earn, sorta. Virtual $ isn't a crappy electronics doo-dad, it's just a number in a computer. Maybe you'll get some discounted airline tickets when you hit level 60 too, you deserve it! Earn your way to a new graphics card, why not."

Taxability of WoW Gold

[Ted Cabeen]

If this happens, it will make it even more likely that the IRS actually weighs in on the issue of the taxability of items obtained through online gameplay. There was a story on NPR's Marketplace a few weeks back about the fact that if you work and obtain something in payment that can be exchanged for money, you owe income tax on it, even if you don't sell it. Since eBay clearly establishes a value for a single piece of WoW gold, you are liable for income tax on that $0.05 you've earned when you sell that BoE item in the auction house or when you loot it. Do you claim the value of your WoW gold as miscellaneous income?

Note: I am not a tax lawyer, and this is not to be interpreted as tax or legal advice. Contact the IRS if you have any further questions.

Re:Taxability of WoW Gold

[Derkec]

The current answer appears to be that you shouldn't claim it. The IRS has taken the position of shrugging and meakly walking the other direction.

More detail here: http://www.legalaffairs.org/issues/January-Februar y-2006/feature_dibbell_janfeb06.msp [legalaffairs.org]