Walmart Savings Catcher is a neat little app where you can scan your Walmart reciept, and then Walmart will then check the prices you paid against competitors, and then refund you the difference.

For example, if I bought a bag of chips for $3 and they find a competitor had a sale on the same item for $2, then they will give me $1 that can be used for a Walmart gift card.

There are limits that Walmart puts on as to how much you can redeem as well as how many receipts you can enter per week. But I found a pretty obscure loophole in their terms that allows me to bypass most of their restrictions. (I don't want to share the specifics, because I don't want copycats and Walmart to shut it down).

It's been so successful that I've quit my job and now spend all my time traveling to different Walmarts and scanning receipts. So far this year (from mid-February to early November) I've made $52,273.44. (Before you call me lazy, I actually work quite a few hours and am on the road constantly).

So my question is, should I be paying taxes on this since it is my primary source of income? If so, how on earth am I supposed to do this? Walmart is paying me in eGift Cards, which is not cash. But it's pretty darn close to cash because you can buy just about everything you need at Walmart.

What should I do?

  • You appear to be required to make a purchase in order to receive the credit for the difference. How much have you spent in order to accumulate $52,273.44. Or is the loophole you are exploiting somehow bypassing the need to purchase and simply receiving the difference in credit? – user41790 Nov 4 '16 at 3:19
  • If you are getting excess cash than what you have spent, and exploiting a loop hole, then it could potentially be close to fraud. If you are sure, this is not fraud, then yes you would need to declare this as income and pay taxes. – Dheer Nov 4 '16 at 3:34
  • No, definitely not fraud. I'm just following their rules. I checked with a lawyer, and he assured me it was legal. Also, last month one of the associates at a Walmart asked me what I was doing, so I explained it to him and he didn't seem to care. – Elver Nov 4 '16 at 3:49
  • You say that you are "traveling to different Walmarts and scanning receipts". That makes me think that you are claiming the refund for a single purchase multiple times due to a bug in Walmart's system. If true, then the money you are getting is not simply a refund of your own money as @Joetaxpayer assumed in his answer. – James Nov 4 '16 at 11:51
  • @James - please read my entire answer. I will probably edit as well, if it remains unclear. – JTP - Apologise to Monica Nov 4 '16 at 13:04

If you ended at your second paragraph, no. It's simply a refund of your own money. Same as any time I get any cash back, whether due to a credit card reward program or price match.

But. Your 4th paragraph changes this. Yes, you owe tax, as it's clearly not your own money coming back. Even barter income is taxable.

Per the new comments appearing, this is not a case of bartering. I cited bartering as an understandable example of when there's no cash and yet, tax is owed. In this situation, value is received, and it counts as income similar to the barter situations.

Just because the value isn't in cash doesn't negate the tax due. I'd rhetorically ask how OP pays his rent/mortgage, utilities, cell phone bill, etc. The answer is simple, non-traditional income, as OP puts it, has a tax due.

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  • So how do I declare this in my income taxes? Also, I don't really have enough cash to pay taxes (since I don't get paid in cash) and I really doubt I can send eGift Cards as payment to the IRS. – Elver Nov 4 '16 at 3:38
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    @Elver You declare it on a schedule C if you are self-employed. And it doesn't matter what form your income takes, it is still taxable and you have to pay your taxes with cash. – David Schwartz Nov 4 '16 at 8:02
  • @DavidSchwartz But I don't have any cash since I don't get paid in cash. All I have is Walmart eGift Cards. – Elver Nov 4 '16 at 12:26
  • @Elver, there are websites that allow you to sell gift cards online. Since Walmart is popular you can probably get a good rate. – gaefan Nov 4 '16 at 14:49
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    Income tax is payable as cash or check or bank transfer equivalent to cash. It's your responsibility to figure out how to make that payment. Note that store cards are not equivalent to cash. – keshlam Nov 4 '16 at 16:21

From a tax perspective, it doesn't matter whether what you are doing is fraud, illegal, or perfectly legit. If you make money, the IRS will want you to pay taxes on it. Drug dealers, pimps, hobos, professional gamblers, extortionists, coupon collectors. The IRS doesn't care. They want their taxes.

Now, where do you pay taxes? There are two likely options:

  1. Line 21 on your 1040. This is for "other income."
  2. Consider yourself self-employed and file a schedule C

I'm not a tax lawyer so I can't say which would be more correct. My expectation is that the IRS would be fine with either.

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  • Good response. Keep in mind, option 2 requires self employment tax, 15% or so, on top of federal and state tax. – JTP - Apologise to Monica Nov 7 '16 at 0:23

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