DBCme

I've read other threads on here that talk about being charged a tax for renting a car, amounts to a couple dollars or so.

I've also had my fair share of mileage earning credit cards over my lifetime.

But, today, when I opened the mailbox, a big suprise came.

$1,500 in interest income was reported on form 1099-INT. Initially i called the bank because I didn't know what it was (shows as "bank promotion" for account type). They said an investigation has already been opened on this issue (by who?), but that the miles are because of the credit card program with American Airlines....

At $1500, for $25,000 miles, that's a value of .06 a mile. Ouch.

Has anyone else received a tax form from Citibank for a related matter?
Mind you mine just arrived today.

JY1024

Wow - haven't heard of this before. My parents and I have had Citi's AAdvantage MC for many years now and have never received a letter like that. Granted, we haven't gone over the $25K mark on any given year either.

Is your yearly spend amount this year higher than past years?

cswusd

In your conversation with the representative, I would point out that the purported taxable nature of the miles was not disclosed in the terms and conditions of the application. It goes without saying that $0.06 cents valuation per mile was also not disclosed (and seems outrageous given that I doubt anyone, including Citi, believes that each mile is worth that much). Ask what Citi paid for each mile.

If this is (or becomes) a widespread practice, class-action lawyers will salivate at the chance of suing Citi under various federal and state law theories.

tev9999

Did you possibly win a prize, contest, etc. from citibank that they may be reporting?

curious_miles

A little bit off topic, but what amount of 1099 income should one report? If it's just a couple of bucks, who cares? But, how about 20, 50, or 200? Is there some guideline threshould whether to report or just not bother?

jan_az

You should report any you recieve. But, if i remember correctly. businesses do not have to send them for under $600

CandymanJim

I suspect the OP has other business with Citi.

Jim

technique

I report any 1099 I receive. Why? Because if I get a 1099, that means the IRS got a copy of it too...

If I don't receive a 1099, I don't report... Very simple...

stupidhead

How do you report a 1099? Do you just attach it to your 1040? It's all too complicated. I made about $95 in interest from various financial institutions last year and I have no other income.

soitgoes

You don't attach it, but you include the amounts on the appropriate lines:
1099-MISC Income
1099-INT Interest income
1099-DIV Dividend income

mia

I could be mistaken, but I read the OP as referring to a 25,000 mile account activation bonus, not to miles earned by spending. It seems pretty straightforward that miles received for spending are a rebate of your own money funded by the fee that Citi collects from the merchant. New account premiums are less clearcut and I can see a line of reasoning that would classify this as income, but I'm not aware of any other card issuer that has made this determination.

The more troubling aspect is the $0.06 per mile valuation. I have read reports that some individuals have declined to accept mileage prizes offered by American Airlines when AA advised them of the value per mile that would be reported for income tax purposes. Citi could be following AA's lead on this. I do not know how a taxpayer can dispute the valuation shown on a 1099, but if we receive one from Citi my accountant will become an expert .

JY1024

Oops! You're right...my bad - the part about the valuation never sunk in for me. :P

curious_miles

Very simple, indeed. I'll follow that way. Thanks.

CandymanJim

No word from the OP, if this is in fact related to the 25k in miles, it is clearly a mistake and I am sure Citi will eventually fix this. Problem is, if they filed a 1099 with the IRS, it is kind of like someone testifying at trial and telling the jury to forget what they heard. So dont expect the IRS to ignore what was filed with them. If nothing else, now your tax return will be subject to review it may have not otherwise been subject to, if in fact this was in error.

Jim

Cheapskate Travels

How could this have anything to do with a mileage reward? The OP stated they received a 1099-INT, not a 1099-MISC or 1099-DIV. How could miles be recorded as interest income and not misc. or div. income?

That would seem to be an error...unless the OP has some special new citibank account that pays interest in AAdvantage miles??? Where can I get in on earning interest for my outstanding mileage balances?