[Consolidated] 1099s for miles & cash rewards from all banks
#783
A FlyerTalk Posting Legend; Moderator: American Express, Capital One, Citi, Chase, Credit Card Programs, Diners Club, Signatures
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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.
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.
#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)
Correct. We have two UR accounts and did not receive 1099s for either one (bonus included)
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)
Correct. We have two UR accounts and did not receive 1099s for either one (bonus included)
#785
Join Date: Feb 2014
Location: Washington, DC
Programs: AA - EP, Marriott - PP
Posts: 227
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.
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
#786
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Join Date: Jan 2005
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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 (12.5k of student loan rebates and 29.5k in AA airfare) is too close to any potential cutoff.
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.
#787
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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.
#788
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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.
#789
Original Member
Join Date: May 1998
Posts: 1,139
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.
#790
Original Member
Join Date: May 1998
Posts: 1,139
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.
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.
#791
Join Date: Jul 2004
Location: Dallas, TX
Programs: Marriott Titanium, Hilton Diamond, Ibotta, Southwest A-List
Posts: 367
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.
#792
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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.
#794
Join Date: Nov 2015
Location: St. Louis, MO
Programs: Southwest Companion Pass
Posts: 790
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/
Here is an interesting article that can shed some light on it:
https://thepointsguy.com/2017/02/are...nuses-taxable/