[Consolidated] 1099s for miles & cash rewards from all banks
Feb 20, 2011, 2:05 pm
#2
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
Programs: UA LT Plat 2MM, Hyatt Discoverist, Marriott Plat/LT Gold, Hilton Silver, IHG Plat
Posts: 66,981
if you earn interest/dividends on any account there will be an 1099 issued (if $1 or more).
Mile bonues do not carry a value and do not generate an 1099.
Mile bonues do not carry a value and do not generate an 1099.
Feb 20, 2011, 2:16 pm
#3
Join Date: Sep 2009
Posts: 1,758
You sure about that? Most FI's do not issue 1099's for less than 10. Citi has been issuing 1099's for savings and checking bonuses including for miles.
Feb 20, 2011, 2:26 pm
#4
Join Date: Jul 2004
Programs: CO, UA, AA, WN, DL Gold
Posts: 2,981
Feb 20, 2011, 4:00 pm
#7
Join Date: Oct 2010
Posts: 411
I've heard that if Citi isses you a 1099 for bonus miles, you can appeal and have them decrease the value of the miles (possibly even down to 0 cents per mile). Can anyone confirm this?
As for other questions/comments...although some banks only generate and send 1099's for interest earned above $10, you may still be obligated to report interest below that threshold to the IRS anyway.
As for other questions/comments...although some banks only generate and send 1099's for interest earned above $10, you may still be obligated to report interest below that threshold to the IRS anyway.
Feb 21, 2011, 8:46 am
#9
Join Date: Jul 2010
Programs: UA, AA, SPG, HH
Posts: 672
There are mixed reports on this, some people were able to get Citi to decrease the value whereas others were not so lucky and Citi stood firm on the 1099
Feb 21, 2011, 9:38 am
#10
Join Date: Sep 2006
Posts: 524
Is my math right?
Feb 21, 2011, 9:58 am
#11
Join Date: Jul 2010
Programs: UA, AA, SPG, HH
Posts: 672
So if you received 40K in miles, how much in taxable income in $ is that equivalent to? $1000? Which means if you pay say, 35% in taxes, that comes out to $350 that you have to pay for the 40K miles? That makes it barely worth it to seek out the promotion.
Is my math right?
Is my math right?
It all depends on how effectively you use your miles, if you used that 40K to get an AA low-season award to Europe then it might be worth it to many people.
Feb 21, 2011, 10:42 am
#12
Join Date: Sep 2006
Posts: 524
Yes the math is correct. As for whether or not this would make it "worth it" that's a subjective matter that everyone has to evaluate for themselves.
It all depends on how effectively you use your miles, if you used that 40K to get an AA low-season award to Europe then it might be worth it to many people.
It all depends on how effectively you use your miles, if you used that 40K to get an AA low-season award to Europe then it might be worth it to many people.
I am pretty sure a much lower number of people would have signed up for the deal had they known they were paying $350 for 40K miles than $0. Thanks to FT I now know to avoid checking account offers like this.
Feb 21, 2011, 11:27 am
#13
FlyerTalk Evangelist
Join Date: Jul 2003
Location: Florida
Posts: 29,797
Oh I agree with you, it's just extremely sneaky to claim someone is getting 40,000 miles without expressly explaining in big print that this is taxable using an assumption of $.025 value per mile given.
I am pretty sure a much lower number of people would have signed up for the deal had they known they were paying $350 for 40K miles than $0. Thanks to FT I now know to avoid checking account offers like this.
I am pretty sure a much lower number of people would have signed up for the deal had they known they were paying $350 for 40K miles than $0. Thanks to FT I now know to avoid checking account offers like this.
Of course majority of folks do not bother to read the fine print let alone think of the consequences when they jump on "deals".
Bonuses associated to BANKING PRODUCTS, meaning Checking, Saving, Money Market etc, are subject to tax. And of course the tax owed depends on the recipient's tax bracket.
Feb 21, 2011, 2:29 pm
#14
Original Poster
Join Date: Apr 2010
Location: SoCal
Programs: Free Agent
Posts: 232
Feb 21, 2011, 2:46 pm
#15
Join Date: May 2003
Programs: AA (1MM), Marriott (LT Gold)
Posts: 1,766
I must have missed the IRS ruling that differentiates mileage bonuses on banking products from brokerage products, credit card products, loan products, hotel stays, rental car activity, etc.
Would you be so kind to post it?
(Thank goodness BankDirect got an exemption from that rule.)
Would you be so kind to post it?
(Thank goodness BankDirect got an exemption from that rule.)