Originally Posted by
daveland
I don't see anyone discussing the tax implications.... Given that Citi now issues a 1099 when you redeem points (and based on just my personal current experience, Citi will 1099 against credit card bonus points - still waiting to see if that will eventually be overturned), what value will they use when you transfer to BA or SQ?
Wrong. Citi has not issued 1099's on TYPs/AA miles earned from the CC side.
I have redeemed TYPs on hotels and hotel gift cards in thousands worth and have never received a 1099. A very large portion of my TYPs are from bonuses of all kinds on the CC sides including sign up bonus, spend bonus, flight point bonus. They are NOT taxable.
Originally Posted by
daveland
Yes, you can skip to the
last pages of this thread. I'm currently fighting a protracted battle about a 1099 received for spending my TY points earned via Thank You Premier credit card spending.
Citi has taken to taxing people on award of AA miles at 2.5c/mile AND taxing Thank You point redemptions based on whatever you redeem for if the points were in any way considered a bonus (credit card account opening bonus, bonus points on spend via retention offer, etc). I'm not yet sure about Flight points. Only regular spend points are safe.
One thing that is unclear - if one doesn't have a Citibank bank account linked to the TY account at all, it's very possible no 1099 is then issued. I'm going to try removing the Thank You program from my bank account.
Your information is misleading. Citi only tax the portion of TYPs earned from banking products, and if that were not reported before, then Citi would catch up on you at redemption.
Even yourself in the other thread admitted that you have to figure out how to separate the TYPs earned / redeemed from the banking products from those from CC. The method is a very basic and simple one, it is Pro-rated on % basis. Of course if you do not keep meticulous records on how the points come together, you are SOL to contest with Citi which, surprisingly has been quite accurate in only incl TYPs from banking products to the 1099. The issue has first come to light at least 3 or 4 years ago from July 2007's first and the major devaluation. People found out 7 months later in Jan 2008 that they were getting 1099s on TYPs redeemed that were earned from their checking account activities and their saving accounts funding bonuses. At the time Citi did not send out 1099s the following year on the EARNED TYPs from banking products the previous year - and it was during the time people were doing a lot of CC fundings to open multiple online saving accounts to double-dip. Later Citi sent out 1099's on TYP redemption in the form of pro-rata based on the % of TYPs from Banking and % of TYPs from CC in your account.
May be your issue stemmed from some TYPs from the Banking products side were never reported on 1099 from several years ago and you continue to earn TYPs on your bank accounts linked to your TYP account.
Yes, the only way to avoid this kind of headache is do NOT earn any bonus from Citi banking products that would linked to the non-taxable earning from the CC side. That would mean you severe the connection between your TYP account and your Citi bank accounts.
However if 100% of your TYPs are from CREDIT CARDS, there is currently NO tax implication to speak of.