Selling Tradelines / Piggybacking Part II: $1000+/hr, 20-40k/yr. Side Gig

[Car Jack]

Here's a few things that might help.

The low limit, new card opening comes up now and then at the old company.  I've got 5 cards there now.  They consistently sell 2 slots every 2 month period.  $25 each slot.  Barclay (2) and US Bank (2) have online adds, so that's easy as pie.  Wait for the next opening as they fill what's needed, then close off.

Watch your account and on the "remove AU" date +1, remove your AU.  I'm finding that I do this and the next day, I've got new orders to take their place.  If you fud around and don't remove them for a week, you very well could miss your closing date and won't get anything till the next time around.

Arebelspy has said that he does Amazon ads.  I used to ignore that and go to the gas station and put in $3 of gas, swap cards, another $3 gas.  At this point, with over 10 slots a month getting filled, nobody needs all that hassle.  Add all your cards to Amazon, remember to change the refill to $3 or $4 and just make your ads.  Keep a spread sheet with last purchase date, closing date, when you last checked the account.  Or I guess you can just figure out expected buy dates and just buy then.  I've been doing this for only about a month and boy....it makes life easier.  Then I need to buy oil for an oil change and bam....I use the money I've dumped into the account.  Be sure your credit cards are all on auto pay and you're cruising with near zero effort.

[EliteZags]

I've never once made a single transaction using any AU cards over 2 years 30+ adds between Chase/Citi/Barlcays and never had an issue with posting

Is someone suggesting that the AU card needs to be used at all for it to post correctly?

or actually I assume you're probably be talking about just using each actual main card you're selling off of

[frugalnacho]

I've never once made a single transaction using any AU cards over 2 years 30+ adds between Chase/Citi/Barlcays and never had an issue with posting

Is someone suggesting that the AU card needs to be used at all for it to post correctly?

or actually I assume you're probably be talking about just using each actual main card you're selling off of

The account itself has to be used.  It doesn't matter if it's your card or the AU card.  Most people here don't actually use the card they send for the AU.  I have never even activated one.

[Car Jack]

Yah, main card to get a balance reported.  No, any AU card goes right in the shredder when it arrives.

[DadJokes]

For those still wondering about whether it should be considered business or hobby income, the IRS does have guidelines:

• Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
• Whether the time and effort you put into the activity indicate you intend to make it profitable.
• Whether you depend on income from the activity for your livelihood.
• Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
• Whether you change your methods of operation in an attempt to improve profitability.
• Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
• Whether you were successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and how much profit it makes.
• Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

No one item can push you in the direction of it being a business or a hobby. Rather, all go into consideration.

The IRS does have a rule of thumb that is used, saying that an activity should earn a profit in 3 out of 5 years to be considered a business. That's generally to prevent people from claiming losses year after year to reduce taxes from other activities, but the same could apply to tradelines. If you aren't ever losing money, then it may be difficult to justify it as a hobby.

[robartsd]

If you aren't ever losing money, then it may be difficult to justify it as a hobby.

The IRS doesn't care if you claim a routinely profitable activity as a hobby unless it is depended on for a significant portion of your income. A few hours a month for what amounts to pocket change is fine as a hobby; since it also never shows a loss it is fine as a business too.

[chuckster]

Anyone gotten their 1099-MISC from the New Company yet?  I realize it's early, but I never got one last year until I e-mailed them about it.

Mine is coming in the mail today.

[Michael in ABQ]

If you aren't ever losing money, then it may be difficult to justify it as a hobby.

The IRS doesn't care if you claim a routinely profitable activity as a hobby unless it is depended on for a significant portion of your income. A few hours a month for what amounts to pocket change is fine as a hobby; since it also never shows a loss it is fine as a business too.

Pretty sure the IRS want's you to claim the income and pay taxes on it. I don't know what (if any) tax difference there is between claiming $1,000 in income from a hobby versus a business. I think the distinction is mainly so somebody can't say they have a "business" that losses thousands every year (reducing taxable income) when really it's a hobby like raising horses, hunting, skiing, crafting, etc.

[secondcor521]

If you aren't ever losing money, then it may be difficult to justify it as a hobby.

The IRS doesn't care if you claim a routinely profitable activity as a hobby unless it is depended on for a significant portion of your income. A few hours a month for what amounts to pocket change is fine as a hobby; since it also never shows a loss it is fine as a business too.

Pretty sure the IRS want's you to claim the income and pay taxes on it. I don't know what (if any) tax difference there is between claiming $1,000 in income from a hobby versus a business. I think the distinction is mainly so somebody can't say they have a "business" that losses thousands every year (reducing taxable income) when really it's a hobby like raising horses, hunting, skiing, crafting, etc.

There are tax differences between deciding something is a hobby versus a business:

1.  Business income is earned income and can contribute to eligibility for IRA contributions (and thus the retirement savings tax credit).  With a person with really low income, it may affect whether or not they meet the requirement to file.
 Hobby income is considered unearned income.
2.  A person pays both sides of Social Security and Medicare taxes on business income, and receives a credit or adjustment for one half of those taxes.  Not so with a hobby.
3.  A person can deduct business expenses against business income.  Not so with a hobby.
4.  A person may qualify for the QBI business deduction with business income.  Not so with a hobby.
5.  Business income is usually reported on Schedule C.  Hobby income is included with other income on Schedule 1 line 8 (on a 2019 return).

Pretty sure most of that is right.  If not, someone more qualified will come along and correct me.

[robartsd]

There are tax differences between deciding something is a hobby versus a business:

1.  Business income is earned income and can contribute to eligibility for IRA contributions (and thus the retirement savings tax credit).  With a person with really low income, it may affect whether or not they meet the requirement to file.
 Hobby income is considered unearned income.
2.  A person pays both sides of Social Security and Medicare taxes on business income, and receives a credit or adjustment for one half of those taxes.  Not so with a hobby.
3.  A person can deduct business expenses against business income.  Not so with a hobby.
4.  A person may qualify for the QBI business deduction with business income.  Not so with a hobby.
5.  Business income is usually reported on Schedule C.  Hobby income is included with other income on Schedule 1 line 8 (on a 2019 return).

Pretty sure most of that is right.  If not, someone more qualified will come along and correct me.

I think business losses can even be deducted against other income (if not, I'm certain it can be carried forward to deduct against business income in another year). I don't think the IRS cares if you consider selling tradelines to be a hobby or a business; but they certainly would not be OK with not reporting it at all (unless you are not required to file).

[secondcor521]

There are tax differences between deciding something is a hobby versus a business:

1.  Business income is earned income and can contribute to eligibility for IRA contributions (and thus the retirement savings tax credit).  With a person with really low income, it may affect whether or not they meet the requirement to file.
 Hobby income is considered unearned income.
2.  A person pays both sides of Social Security and Medicare taxes on business income, and receives a credit or adjustment for one half of those taxes.  Not so with a hobby.
3.  A person can deduct business expenses against business income.  Not so with a hobby.
4.  A person may qualify for the QBI business deduction with business income.  Not so with a hobby.
5.  Business income is usually reported on Schedule C.  Hobby income is included with other income on Schedule 1 line 8 (on a 2019 return).

Pretty sure most of that is right.  If not, someone more qualified will come along and correct me.

I think business losses can even be deducted against other income (if not, I'm certain it can be carried forward to deduct against business income in another year). I don't think the IRS cares if you consider selling tradelines to be a hobby or a business; but they certainly would not be OK with not reporting it at all (unless you are not required to file).

You are essentially correct.  The bottom line from your Schedule C contributes to the earned income section on your tax return.  So if you have $100K in W-2 income and a $10K Schedule C loss, then you end up with a $90K total income.

I think the IRS expects you to report things correctly.  I'm not sure how hard the agent would work to check on the hobby / business question; I think they have much more productive things to go after.  But you are very correct in that if you have any income reported to the IRS, their computers check to make sure it got reported on your tax return somewhere, and they'll spit out automatic notices if there is income missing.

[Padonak]

How much difference does it make if you report tradeline income as a hobby or business? Let's say your salary is 100K and you earn another 5K selling tradelines (not my numbers, just an example). What would be the difference approx? You would have to pay FICA taxes on business income but not hobby income, correct? But also you would be able to claim QBI deduction (only 80% of business income is taxable) and open a SEP IRA, so that would offset some of the FICA payments.

[secondcor521]

How much difference does it make if you report tradeline income as a hobby or business? Let's say your salary is 100K and you earn another 5K selling tradelines (not my numbers, just an example). What would be the difference approx? You would have to pay FICA taxes on business income but not hobby income, correct? But also you would be able to claim QBI deduction (only 80% of business income is taxable) and open a SEP IRA, so that would offset some of the FICA payments.

It would be hard to say.  It would depend partly on how much in business expenses you chose to deduct, as well as your overall AGI (Social Security taxes end at a certain amount of earned income).

But roughly 15.3% of net income for SE taxes minus 7.65% of net income for SE tax adjustment minus 20% of QBI.  So probably in most cases worth it to report as business income.

[canejd]

How do you add the SSN online through Barclays? I saw a previous post that said to opt out of getting a card, but I don’t get the option to add the SSN.

[Car Jack]

How do you add the SSN online through Barclays? I saw a previous post that said to opt out of getting a card, but I don’t get the option to add the SSN.

You don't.  Just the address is enough to post for the AU.

[secondcor521]

How do you add the SSN online through Barclays? I saw a previous post that said to opt out of getting a card, but I don’t get the option to add the SSN.

You don't.  Just the address is enough to post for the AU.

My opinion based on some experience is it takes three bits of data to post an AU.  It can either be name/DOB/address, or name/SSN/address, or name/DOB/SSN.

I don't recall which bits Barclays takes on their online add form, but I know that the Barclays online add form works for AUs to post.

[EliteZags]

last time I tried on Barclays pretty sure it was just name/DOB, also never seen any card ask for address we aren't even given it
strange since there are a few with common names, and DOB could overlap

[secondcor521]

last time I tried on Barclays pretty sure it was just name/DOB, also never seen any card ask for address we aren't even given it
strange since there are a few with common names, and DOB could overlap

Barclays asks for name, DOB, relationship, and does have a spot to enter the AU address (or use your own).  Both Old Company and New Company provide AU addresses.

[SilverAg47]

How much difference does it make if you report tradeline income as a hobby or business? Let's say your salary is 100K and you earn another 5K selling tradelines (not my numbers, just an example). What would be the difference approx? You would have to pay FICA taxes on business income but not hobby income, correct? But also you would be able to claim QBI deduction (only 80% of business income is taxable) and open a SEP IRA, so that would offset some of the FICA payments.

Contributing to a SEP IRA or Solo 401k will not offset any FICA if you file a Sch C.

It would be hard to say.  It would depend partly on how much in business expenses you chose to deduct, as well as your overall AGI (Social Security taxes end at a certain amount of earned income).

But roughly 15.3% of net income for SE taxes minus 7.65% of net income for SE tax adjustment minus 20% of QBI.  So probably in most cases worth it to report as business income.

Here are some calculations to consider.  Someone please chime in with any errors you spot...

If we are in the 22% tax bracket and treat it as Hobby Income, it is just 22% tax (So $1,000 in tradelines would be $220 Federal Tax due) 

Now we will assume we are in the same 22% tax bracket and file as Sch C income, and we will assume no SEP IRA or Solo 401k contributions, and no Sch C expenses whatsoever:

SE Tax is at 15.3%, but it calculated on 92.35% of Sch C income, so 0.153*0.9235 = 14.13% TAX

The SE Tax deduction is 1/2 of this, and it is only a deduction, so here is that math:
0.1413 / 2 = .07065
0.07065 * 0.22 = 1.55% TAX SAVINGS

QBI, sec 199A 20% deduction is based on Sch C Income - SE Deduction, so here is that math:
0.20 * (1 - 0.07065) * 0.22 = 4.09% TAX SAVINGS

So that works out to 0.22 + 0.1413 - 0.0155 - 0.0409 = 30.49% Tax (So $1,000 in tradelines would be roughly $305 in Federal Taxes due)

[Spitfire]

After a 4 month dry spell with a new card after my old one got shut down, I just had two users added this week with the old company. Barclay card, opened in 2016, 20.5k limit (I moved a limit from another card with a quick phone call to get to the next tier of payment).

[MVal]

What strategy do some of you use for removing users? I know the companies tell you to remove them after three months or so, but aren't you less likely to get shut down if you leave them longer? Of course, this probably delays payouts and makes for fewer users, but better to not lose the cards. I'm just wary after losing a card years ago.

I've got a user right now who has been on my card for a little over four months. I'm still hesitant to remove.

[Car Jack]

I remove them from a couple days to a couple weeks after told to do so (old company uses a list, new company sends email.....when they don't forget).  I had one on Chase where I removed the card from use and the AU was on there for over a year.  Just remember that you won't get added AUs if your number of slots for AUs have not been removed.

[Spitfire]

I remove them when they tell me. What (I think) got me busted was that someone cancelled their order, so I added and removed that person within a couple of days. If another cancellation happens I will keep them for a couple of cycles like a normal order.

[Shade00]

Unfortunately I gave up on this gig some time ago. Discover closed my account back in 2018 and they would never give me any information about exactly why, but AUs is the only thing I can fathom. I haven't had any luck with AUs on my Citi card. They never seem to report properly despite following the instructions to call in and add SSN and so on.

Has anyone had any luck opening a new Discover card after getting an account closed? I would like to get another one but not sure how long I should wait or if they will ever give me another one.

[DeniseNJ]

Unfortunately I gave up on this gig some time ago. Discover closed my account back in 2018 and they would never give me any information about exactly why, but AUs is the only thing I can fathom. I haven't had any luck with AUs on my Citi card. They never seem to report properly despite following the instructions to call in and add SSN and so on.

Has anyone had any luck opening a new Discover card after getting an account closed? I would like to get another one but not sure how long I should wait or if they will ever give me another one.

I think you can sue them for canceling without telling you.  You'll have to search this thread but I know some ppl got a cash settlement from discover for this very reason.  Somone on here is an attorney and handled it for them.

[secondcor521]

Unfortunately I gave up on this gig some time ago. Discover closed my account back in 2018 and they would never give me any information about exactly why, but AUs is the only thing I can fathom. I haven't had any luck with AUs on my Citi card. They never seem to report properly despite following the instructions to call in and add SSN and so on.

Has anyone had any luck opening a new Discover card after getting an account closed? I would like to get another one but not sure how long I should wait or if they will ever give me another one.

I think you can sue them for canceling without telling you.  You'll have to search this thread but I know some ppl got a cash settlement from discover for this very reason.  Somone on here is an attorney and handled it for them.

@PointsLawyer.

[Padonak]

Is there a way to add AUs to Citicards without having them send you actual cards? I know that it's easy to do with Barclays for example. Never figured out how to do it with Citi.

[AKS74U]

From the new company regarding payout date:  10 weeks after the closing date

It's been 12+ weeks and still no payment nor any response from the owner to my repeated inquiries about my payment. It was my only sale with new company last year. Very disappointing to say the least. But I am also not sweating it. Old company is just a pleasure to work with and they have been getting all my cards.

I feel your pain. You would think after years of dropping the ball on untimely payments/non responsiveness, they would have figured out a better system.

I am seriously so annoyed with the new company. I've only had 3 adds with them over the last year, and I have not gotten paid within 2 months of "on-time" (11 weeks after is what they told me is standard) and have had to send follow-up after follow-up email. I'm so frustrated! I just emailed Cliff for the 3rd time about my AU added in September 2019. After I get paid for my last add I am DONE with them. It's not worth the hassle of chasing down my payment every. single. time. ACCKK!

I am leaving them too. I just need to remove a couple users and get paid. they owe me $1000+. Ive been asking about payment since november, Erica and Cliff, no answers.

[arebelspy]

Ugh. Sounds like the late payment issues have gotten way worse. I've contacted them for a few people and been able to get payment, but this sounds pretty widespread. As always, anyone can feel free to PM me with issues.

[merula]

Ugh. Sounds like the late payment issues have gotten way worse. I've contacted them for a few people and been able to get payment, but this sounds pretty widespread. As always, anyone can feel free to PM me with issues.

Yes, I do think it has gotten much worse over time. I keep track of order dates and payment dates (see image attached), and early 2018 I was paid ~60 days after the order, then late 2018 it went up to ~70s, ~90s, and 128. I've got an April 2019 add that I haven't been paid for (in fairness, I didn't notice until December), and I got an email yesterday that that payment would be going out immediately.

When I emailed E as a second point of contact, she said that C was the only one who could handle payment issues and he's been particularly busy lately with a new portal about to launch, which is an explanation but not really good business practice.

[Kcinegnet]

Just out of curiosity, is there a reason why we are not using the direct names of the tradeline companies?

[Car Jack]

Something I just happened to notice.  Closing dates change.  Is there any standard practice to notify the TL company?  I was updating my spread sheet and noticed that the closing date the TL has and what's on my last statement is now about half a month apart.  Or am I wrong here?

[arebelspy]

Something I just happened to notice.  Closing dates change.  Is there any standard practice to notify the TL company?  I was updating my spread sheet and noticed that the closing date the TL has and what's on my last statement is now about half a month apart.  Or am I wrong here?

I would notify them. That's a pretty crucial piece of info.

[EliteZags]

anyone else have a fraud alert on their credit report and seen any issues with AU's posting?

I recently put one on mine due to a recurring identity theft issue starting from years ago(unrelated to and preceeding any tradeline activity), which requires additional verification for any new CC accounts I open. Just tried adding several AMEX AU's online and it said applications pending verification, I called and they just needed some identity verification info to complete the adds. Not sure if every add I'll make with other cards (I also have Chase/Citi/Barclays) will just require another phone verification or could the fraud alert jeopardize the posting in some way?

fyi recently started with a company that takes AMEX although since it doesn't backdate and only posts as a new acct it's only $25 but sells frequently and easy add/removal process, just sold 5 at a time month 1. The company said they've added up to 99 users on a card without any risk of shut down, the most AMEX has ever requested is proof of income verification

[Padonak]

@EliteZags which company accepts AMEX cards for tradelines? I thought nobody accepted amex?

[EliteZags]

I can PM the info to anyone interested

[Padonak]

Yes, can you pm me please?

[jojoguy]

I am somewhat branching away from topic here. I have been churning credit cards for the last year and a half and trying to plan ahead to jump into this venture as well. I just got rejected in applying for a Capital One Savor One card. This is the first time I have been rejected for anything as my credit score has been hovering between 805-810. I think that I got rejected because I got the Capital One Quicksilver back in December. I got a little greedy. If you are rejected, how long will it take to apply for the same card or same credit card company again?

[Padonak]

Doctor of credit is probably the best source of information about credit card applications, churning restrictions etc

[jojoguy]

Doctor of credit is probably the best source of information about credit card applications, churning restrictions etc

Thanks. Ah, I see why my application was rejected now. I didn`t know that Capital One limits one card per 6 months.

[frugalnacho]

Doctor of credit is probably the best source of information about credit card applications, churning restrictions etc

Thanks. Ah, I see why my application was rejected now. I didn`t know that Capital One limits one card per 6 months.

capital one is finicky.  I don't even have a CO card (neither does my wife) and we were both rejected when we applied.  I don't think you could find better candidates for a CC than me and my wife, so their rejection sticks out as really weird to me.  Of course this doesn't stop them from spamming the shit out of my address with applications for their cards.

[chuckster]

Just out of curiosity, is there a reason why we are not using the direct names of the tradeline companies?

Trying to keep the info out of Google

[Michael in ABQ]

Doctor of credit is probably the best source of information about credit card applications, churning restrictions etc

Thanks. Ah, I see why my application was rejected now. I didn`t know that Capital One limits one card per 6 months.

I was successful in signing up for that card (with the very nice $500 cashback bonus). However, in reading the comments it sounds like they're really looking for people they can make money off of, i.e. not people with excellent credit who have never made a late payment and don't carry large balances.

[Nate79]

From the new company regarding payout date:  10 weeks after the closing date

It's been 12+ weeks and still no payment nor any response from the owner to my repeated inquiries about my payment. It was my only sale with new company last year. Very disappointing to say the least. But I am also not sweating it. Old company is just a pleasure to work with and they have been getting all my cards.

I feel your pain. You would think after years of dropping the ball on untimely payments/non responsiveness, they would have figured out a better system.

I am seriously so annoyed with the new company. I've only had 3 adds with them over the last year, and I have not gotten paid within 2 months of "on-time" (11 weeks after is what they told me is standard) and have had to send follow-up after follow-up email. I'm so frustrated! I just emailed Cliff for the 3rd time about my AU added in September 2019. After I get paid for my last add I am DONE with them. It's not worth the hassle of chasing down my payment every. single. time. ACCKK!

I am leaving them too. I just need to remove a couple users and get paid. they owe me $1000+. Ive been asking about payment since november, Erica and Cliff, no answers.

Same issue here. No payment for months and response has been almost non existent. And when Cliff does respond and says they will pay it never happens.

Sent from my SM-G950U using Tapatalk

[Car Jack]

I was rejected also for a Savor card.  They gave the reason as being too many cards applied for in the last 2 years.  Note that none of those cards applied for were cap one cards.  So they're more restrictive than even Chase.  I forget the max cap one allows, but remember noting it was far worse than Chase is.

[Kcinegnet]

@EliteZags I too am interested in Amex tradeline company. I also am looking for other companies if others have suggestions. My previous companies have gone out of business or are selling poorly. Most of my cards are under 3 years old but between $4000 & $13,000. I'd be glad to mention you referred me.

[Car Jack]

@EliteZags I too am interested in Amex tradeline company. I also am looking for other companies if others have suggestions. My previous companies have gone out of business or are selling poorly. Most of my cards are under 3 years old but between $4000 & $13,000. I'd be glad to mention you referred me.

Be very afraid.

Do you know how to vet a tradeline company to know that they're keeping your information secure?  Do you know how to determine that the SEC isn't going to include you in a fraud conspiracy charge?  Are you ok with adding an AU and then having the tradeline company say you're not getting paid, take down the AU because they paid their fee with a stolen credit card?

PM arebelspy for the companies.  Then email the company using Joe's referral.  He gets some money for that and deserves it in my opinion because he's done the legwork.  It's easy to find companies who will take any card you have.  Then things go wrong and you can only blame yourself for not even knowing what to check.  Don't get greedy and careless.  This ain't no party.  This ain't no disco.  This ain't no foolin' around.

[erutio]

Also, AMEX cards don't work because authorized users on AMEX cards do NOT inherit the card history. 

ie.  If you had you amex open since 2010, but added an AU on 01/2020, on the AU's credit report, it will show a new AMEX card starting on 01/2020 for them, not 2010.

If a tradeline company claims to be able to accept AMEX cards, they are lying to you. 

[arebelspy]

Unfortunately both old and new company aren't accepting new cards right now, unless they're very old/high limit.

I wish I could find other TL companies that vet AUs well, but it's a more expensive/complicated process and most just don't bother.

I keep searching, but just hear bad stories. Unfortunate.

Also, AMEX cards don't work because authorized users on AMEX cards do NOT inherit the card history. 

ie.  If you had you amex open since 2010, but added an AU on 01/2020, on the AU's credit report, it will show a new AMEX card starting on 01/2020 for them, not 2010.

If a tradeline company claims to be able to accept AMEX cards, they are lying to you. 

I mean they CAN accept Amex, it just doesn't really help them in terms of credit age, it only helps their limit.

For someone with an average age that's quite old, but has lots of debt, adding an Amex would lower their DTI, but worsen their average age.

For most users it wouldn't help, and likely could hurt, so that's why most don't accept it, or use other card issuers.

Apparently that company uses them, but pays very low. Doesn't seem worth it to me, but YMMV.

[EliteZags]

Also, AMEX cards don't work because authorized users on AMEX cards do NOT inherit the card history. 

ie.  If you had you amex open since 2010, but added an AU on 01/2020, on the AU's credit report, it will show a new AMEX card starting on 01/2020 for them, not 2010.

If a tradeline company claims to be able to accept AMEX cards, they are lying to you.

that's why the rate is only $25 but they sell high volume and never have issues from Amex, took 5 minutes to add 5 AU's online and I don't use the card a ton anyways