nrr

I received a 1099-misc from Citibank. I called cs and by the third agent, learned that it comes from "thank you point useage". I was not aware that redeeming typ counts as earned income. Has anyone else received a 1099-misc from Citibank?

mcgahat

I have not. What type of redemption did you make?

rbessler

I saw this mentioned over at FatWallet -- apparently a 1099-misc is triggered for redemptions over $600 on ThankYou points resulting from *bank account bonuses* -- which need to be treated as interest. Credit card points, etc. shouldn't trigger it.

nrr

Yes, they were running a promo for Citigold accts who invested in a "special" money market acct (back in April or May of 2008), in conjunction with the typ system; it probably was the combination of all of these which triggered my 1099-misc.

mcgahat

Ok, I spoke too soon.....I noticed the 1099 that I got from Citibank (today) looked to be about $800 more than the interest I actually received in my ultimate savings account. I assume it came from the 40K promo I got from opening up the savings account and at the fixed points option that would equate to about $800. Kinda sucks really but I guess they have to do this since it is tied to a bank account?

mia

You may wish to review this thread from January 2008 when Citi also sent out 1099's which (if I recall correctly) were a mistake. Read the entire thread, the early messages contain a typical amount of misinformation...

http://www.flyertalk.com/forum/other...le-income.html

mcgahat

Ok, I dug even deeper and noticed that I actually received two 1099's from Citibank. A 1099-INT and a 1099-Misc. So, I assume the 1099-misc is for TYP's but how do they calculate this? I made a redemption of $2700 but the 1099-misc is for about $1250. I am intrigued as to how they calculate this as the tax on that amount isn't exactly small.

neophyte

Just one more reason TYP is inferior now to other programs - the hanging threat of receiving random 1099-INT and/or 1099-Misc.

People keep saying that TYP should will still have some value after March 1st, but any such value has to be discounted by possible taxes.

Straight Cashback cards, on the other hand never report to IRS, and I believe Cashback is considered a rebate and even was tested in courts.

mcgahat

Well, I find it interesting that whey I call to ask how exactly they calculate this that Citibank and Thank You pass me off to each other and say the the other does the calculation.

I think I have figured it out though. They apparently only 1099 the points you received in relation to opening your banking account or the monthly points you get and they are apparently 1099'ed at the rate in which you redeemed them. In my case I did a redemption of 90,000 points for an airline award that was about $2500. If I take the 2.x cents per point time the number of banking points I used out of the 90,000 it comes pretty close to the 1099.

neophyte, you make a good point but honestly I would have made the above redemption even knowing what I know now. The rate in which I can get points with Thank You with the Citi Amex makes it that much more valuable for the first year at least. I do agree that after that the program loses a lot of its value.

araknis

i just got the dreaded 1099-misc as well. called citibank and they will provide an explanation in writing in a weeks time. i got hit with a $135X amount. not sure how the 40k bonus is worth > 3cents...

mcgahat

What did you redeem the points for? I assume you also got some points added for being a banking customer, lets say 400 per month. Those additional points for banking would be put into the equation as well making right at 3cents per point or in my case just under which was about what I got on my 90K redemption.

Leemajors

Citibank announced last month that ‘fixed point redemption’ (which allows redemptions valued up to 3 cents a point instead of the standard 1 cent) would be ending March 1. It appears that they then failed to wait until March 1st and already went ahead and pulled the plug on 3 cents value, capping redemptions at 2 cents as of last week.

Has anyone else experienced this issue as I don't think that their terms and conditions allow this?

sunil

From reading Fat Wallet it seems here's whats happening. If you received TYP from any bank bonuses , then tickets that are redeemed using those points are treated as taxable, even if they include points earned from non-taxable sources like CC points... urgh..

The formula seems to be 1099-MISC amount = (full value of tix + booking fees) x (redeemed taxable points) / (redeemed total points)

lpy

I received an 1099-MISC from Citi with $600+ in other income section. Could not figure out what it is but thought it might be related to the TYP redemption, now it is confirmed this is the case.

nrr

I received a "corrected" 1099-misc, showing $0.00. A note attached states that the initial 1099-misc "was overstated" and they have corrected the error.^