Question: What is the ruling on saying ‘Wa Iyyaka’ to the one who says ‘Jazakallahu Khairan’?
Answer: “There is no harm in this. His statement ‘Wa Iyyaka’ means: May Allah reward you with good. So it is correct speech; no harm in it”.
[Taken from: http://audio.islamweb.net/audio/index.php?page=FullContent&audioid=171121]
Faisal Ibn Abdul Qaadir Ibn Hassan