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[Consolidated] 1099s for miles & cash rewards from all banks

[Consolidated] 1099s for miles & cash rewards from all banks

Old Apr 18, 2016, 9:17 am
  #781  
 
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I would not be playing this game if there were T-forms for miles/pts. If the rules were to change, I would just cry.
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Old Apr 25, 2016, 3:27 pm
  #782  
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So to clarify, if I have a rewards credit card (ex: the WF 5% card), and I cash out those rewards, that is not taxable income? (Or is it just that banks are choosing not to issue 1099s? Subtle but important distinction!)
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Old Apr 25, 2016, 5:43 pm
  #783  
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Personal credit card rewards are not income because they are a refund of your own money. An exception could be if the expenses which earn the reward are deducted from your taxable income (such as when making a charitable contribution, or an expense for business). In those instances the deductions may need to be reduced by the value of the reward, or if the deduction was taken in a previous year the partial reimbursement (reward) might be treated as income when received.

The card issuer would have no knowledge of such specifics, and you should discuss them with your tax advisor rather than rely on advice from an online message board.
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Old Apr 25, 2016, 6:59 pm
  #784  
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My experience is that Citi, BofA and Wells Fargo report all cash incentives, no matter how minimal.

Chase reports cash payments >$250 according to my banker.

Have never received a 1099 for points, or for points converted to statement credit (e.g. did this last year with Capital One)

Originally Posted by xSTRIKEx6864
No 1099 for Chase UR
Correct. We have two UR accounts and did not receive 1099s for either one (bonus included)
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Old Apr 26, 2016, 4:10 pm
  #785  
 
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I'm not sure if this should be asked here or in the Citi forum, so mods please move as you see fit.

For anyone that received a 1099 from Citi for TYPs earned from a checking or savings account, would you mind sharing how much you redeemed them for in dollars? I'm trying to figure out how close to $600 the redemption value needs to be in order for a 1099 to be issued. I have 42k of TYPs eligible to be redeemed from a checking account, and a Prestige I can use to enhance the value.

I'm just trying to figure out if redeeming the 42k TYPs for $582 (15k of student loan rebates and 27k in AA airfare) is too close to any potential cutoff.

Last edited by robbierob03; Apr 27, 2016 at 3:22 pm Reason: math is hard
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Old Apr 27, 2016, 3:04 pm
  #786  
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Originally Posted by robbierob03
I'm not sure if this should be asked here or in the Citi forum, so mods please move as you see fit.

For anyone that received a 1099 from Citi for TYPs earned from a checking or savings account, would you mind sharing how much you redeemed them for in dollars? I'm trying to figure out how close to $600 the redemption value needs to be in order for a 1099 to be issued. I have 42k of TYPs eligible to be redeemed from a checking account, and a Prestige I can use to enhance the value.

I'm just trying to figure out if redeeming the 42k TYPs for $582 (12.5k of student loan rebates and 29.5k in AA airfare) is too close to any potential cutoff.
Citi doesn't use the actual redemption cost to determine whether to issue a 1099. They use some arbitrary valuation of a TYP points or AA miles to do so. In the case of AA miles, many people consider it to be a ridiculous valuation, but there's nothing you can do about that (other than not earning miles / points from checking / savings accounts, only from credit cards).
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Old Apr 27, 2016, 3:46 pm
  #787  
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Originally Posted by sdsearch
In the case of AA miles, many people consider it to be a ridiculous valuation, but there's nothing you can do about that (other than not earning miles / points from checking / savings accounts, only from credit cards).
Actually you can report the correct FMV on your tax return, but you will get a notice when the IRS computer finds a mismatch to the 1099. You can then contest the value reported by Citi. I understand people have had some success in doing so but dealing with the IRS is never a pleasant process.
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Old Apr 27, 2016, 3:56 pm
  #788  
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Originally Posted by sdsearch
Citi doesn't use the actual redemption cost to determine whether to issue a 1099. They use some arbitrary valuation of a TYP points or AA miles to do so..
This is accurate for AAdvantage miles, but not for ThankYou points. Citi computes the actual redemption value of TYP points. They cannot do this for AAdvantage because the miles are simply transferred to your AA account.
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Old Apr 29, 2016, 8:11 am
  #789  
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Originally Posted by Boraxo
Actually you can report the correct FMV on your tax return, but you will get a notice when the IRS computer finds a mismatch to the 1099. You can then contest the value reported by Citi. I understand people have had some success in doing so but dealing with the IRS is never a pleasant process.
If a person enters the gross amount that matches the 1099, and then enters a negative amount labeled something like "FMV Prize Adjustment", the IRS computer finds the gross amount and does not appear to automatically send a matching notice. Of course, a manual review might still result in a letter requesting an explanation. But many years ago when this was a hot topic, many FTers did in fact use this technique and no one appears to have received a notice. Most of the posts indicated that they reduced the value by some amount, no one directly reported reducing it all the way to $0. And this is not really a topic limited to miles. People in the studio audience caught those ridiculous "bling bags" from Oprah and were horrified at receiving 1099s for the gross retail price of junk they never used. That is where most of the guidance on using a "FMV Prize Adjustment" arose in the literature on this topic. The issuer of the 1099 gets the greatest protection under the law by using a high value, but it is not very good customer service.
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Old Sep 5, 2017, 3:07 pm
  #790  
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Someone posted this information in the AA Forum, and a few may realize that this was the thread that started the discussion of whether AA miles received for opening a checking/savings account (without a required use of the debit card) should have been reported as taxable income by Citi on a Form 1099, and, even if so, should those miles have been reported on the Form 1099 using the [Ludicrous] value of 2.5 cents per mile.

A lot of people who followed this issue used the FMV Prize Adjustment (or other tax compliance technique) to reduce the reported taxable income to a lower amount than 2.5 cents per mile, sometimes even going all the way down to 0 cents per mile. Of course, a few reported the full amount of taxable income reflected on the Form 1099, essentially valuing the miles at 2.5 cents each.

Over time, this issue declined in relevance on Flyertalk because Citi adopted some techniques, such as requiring the use of a debit card to get miles, that arguably allowed it to take the position that it was not required to issue a Form 1099 for miles awarded from opening checking/savings accounts. That has nothing to do with whether the miles are taxable, or at what value they should be reported as income if they are taxable. But the lack of a Form 1099 simply leaves Citi out of the argument.

For the years that Citi did issue a Form 1099 valuing the miles at around 2.5 cents per mile (which if a person did not follow the issue, was the value that customers occasionally purchased blocks of 1,000 AA miles needed to "top off" accounts in order to get the sufficient level of miles often needed for a trip) a lawsuit was filed. Citi has settled that lawsuit and it appears the recipients of those 1099s may now be entitled to money damages (or however Better Call Saul phrases it). I am not sure how much someone would get, what documentation is required, whether reducing the income by a FMV Prize Adjustment reduces the money damages (as it logically should), or whether anyone even cares about an issue that arose many years ago. But I found it of interest back then, and here is the class action settlement link.

https://hirschairlinemilessettlement.com/

I think it is kind of awesome that a law firm fought and won on this issue. It really was heavily discussed on this thread many years ago.
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Old Feb 3, 2018, 4:14 pm
  #791  
 
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I received a 1099-MISC from Discover Bank and I only have a Discover Credit Card which I have maximized the cash back each quarter and sent some referrals to friends. I called the number listed on the 1099 and it reached Disc Card and the rep told me it was possibly from making over $600 in Cash Back but she couldn't tell me what it was from. Has anyone received 1099's from Discover like this? I haven't had a bonus from them because my card is over 10 years old so I know it's not that.
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Old Feb 3, 2018, 6:05 pm
  #792  
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Originally Posted by Vip4me
I received a 1099-MISC from Discover Bank and I only have a Discover Credit Card which I have maximized the cash back each quarter and sent some referrals to friends. I called the number listed on the 1099 and it reached Disc Card and the rep told me it was possibly from making over $600 in Cash Back but she couldn't tell me what it was from. Has anyone received 1099's from Discover like this? I haven't had a bonus from them because my card is over 10 years old so I know it's not that.
How many referrals did you get?
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Old Feb 3, 2018, 6:15 pm
  #793  
 
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Only 8 and they come as cashback.
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Old Feb 3, 2018, 6:44 pm
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Originally Posted by Vip4me
Only 8 and they come as cashback.
What was the dollar amount? If it's over $600 they are required to send you a 1099 misc. That's not to say lesser amounts aren't taxable but $600 is the threshold that is required to send you one.

Here is an interesting article that can shed some light on it:

https://thepointsguy.com/2017/02/are...nuses-taxable/


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Old Feb 3, 2018, 6:57 pm
  #795  
 
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That's disappointing. I was under the indication that it would not be taxed as part of rewards but I understand what that CPA is saying. Thanks!
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