[Consolidated] 1099s for miles & cash rewards from all banks
#76
Join Date: Sep 2010
Location: Cypress Hills Research Center
Posts: 5,295
Does anyone have the address/email of someone to whom we could write to complain about this policy? I'd like for them to know why I'm closing my account--beyond just telling the branch manager.
#77
Join Date: Mar 2010
Programs: AA EXP, Marriott PLT, Sheraton Gold
Posts: 27
I received a 1099-INT for $250 for 10K miles. Was it incorrect for them to issue a 1099-INT since it wasn't interest? Should it have been a 1099-MISC?
The reason I ask is the IRS did make it sound like they could send a letter back to the issuer for any form of 1099 other than INT!
Thanks
The reason I ask is the IRS did make it sound like they could send a letter back to the issuer for any form of 1099 other than INT!
Thanks
#78
A FlyerTalk Posting Legend
Join Date: Feb 2001
Location: Berkeley, CA USA
Programs: Piggly Wiggly "Shop the Pig!" Preferred Shopper
Posts: 56,898
I think the $.025 per mile overstates the fair market value of miles. There is a pretty robust market for the purchase and sale of miles, and I'm not talking about the "retail" sale option the airlines offer. I'm talking about the mileage brokers.
Were it for my taxes, I'd find two or three mileage brokers, get the applicable prices for purchase/sale, and come up with an average. This, I would argue to the IRS in a statement at the back of my 1040, is the accurate FMV of the miles. I'd declare that amount in Schedule B for interest income.
That's me, though. I'm fine with opening up the possibility of battling with the IRS where I am confident of my position. Others might really dread such a potential battle.
Were it for my taxes, I'd find two or three mileage brokers, get the applicable prices for purchase/sale, and come up with an average. This, I would argue to the IRS in a statement at the back of my 1040, is the accurate FMV of the miles. I'd declare that amount in Schedule B for interest income.
That's me, though. I'm fine with opening up the possibility of battling with the IRS where I am confident of my position. Others might really dread such a potential battle.
#79
Join Date: Mar 2010
Programs: AA EXP, Marriott PLT, Sheraton Gold
Posts: 27
Any Further 1099s for checking accounts?
I have received a 1099INT only for savings accounts (2 x 5K bonuses), did anyone recieve them for NON-INTERST BEARING checking accounts?( I.E. the 20K miles promo they ran last year)
#80
Join Date: Apr 2010
Posts: 257
I just spoke with IRS agent for 1099-INT and here's what I found out.
According to one of their publications (i think she said it was 550), the value of the gift is determined by the cost to the financial institution.
So Citibank is totally wrong at showing the value of the miles to be $0.025. In the response to my request for an amended 1099-INT that I sent to citibank, they never gave me an explanation of their cost. I severely doubt they paid $0.025 per mile.
The agent also told me, if you believe your 1099-INT is incorrect, and you have not been able to have it corrected by the financial institution, you are allowed to use your own estimate for the 1099-INT amount.
If the financial institution sends you an amended 1099-INT later, you need to file an amended return with the new amount.
I'll be using my estimate of miles valuation at $0.005, which lowers my 1099-INT amount to $25 from $125.
According to one of their publications (i think she said it was 550), the value of the gift is determined by the cost to the financial institution.
So Citibank is totally wrong at showing the value of the miles to be $0.025. In the response to my request for an amended 1099-INT that I sent to citibank, they never gave me an explanation of their cost. I severely doubt they paid $0.025 per mile.
The agent also told me, if you believe your 1099-INT is incorrect, and you have not been able to have it corrected by the financial institution, you are allowed to use your own estimate for the 1099-INT amount.
If the financial institution sends you an amended 1099-INT later, you need to file an amended return with the new amount.
I'll be using my estimate of miles valuation at $0.005, which lowers my 1099-INT amount to $25 from $125.
#81
Join Date: Jun 2010
Location: Fresno
Posts: 195
I can't find any specific rulings by the IRS, but I would be inclined to put my faith into someone like this:
The IRS is on record that, until further notice, it will not include frequent flyer miles in anyone's income. This includes situations in which miles are earned either for business travel or for personal expenditures. Several years ago, the IRS had attempted to tax frequent flyer miles as compensation. However, the IRS backed off after airlines, transportation trade associations and business groups complained that the their approach was unworkable. Although the IRS reserves the right to reassert the position that miles should be taxed, for all practical purposes, it will continue to exempt these miles from tax. The IRS must develop an administratively feasible way to tax these miles; otherwise, it is not a likely possibility for the foreseeable future.
For more information, contact The Henssler Financial Group Tax & Accounting Division
From: http://www.henssler.com/radio/032709/tax-content.asp
Further, our own Randy Petersen has this to say about winning miles:
If you read the fine print of the United Mileage Plus program, these miles are not your property they belong to United. Because the miles are not your property, it would be difficult for them to constitute a taxable base. This and a few other reasons are exactly why the IRS has no policy to establish taxation on "miles."
From: http://www.usatoday.com/travel/fligh...sk-randy_x.htm
Doing more research, I kept running into the phrase "in-kind promotional benefits are not taxable unless converted to cash".
Cali
The IRS is on record that, until further notice, it will not include frequent flyer miles in anyone's income. This includes situations in which miles are earned either for business travel or for personal expenditures. Several years ago, the IRS had attempted to tax frequent flyer miles as compensation. However, the IRS backed off after airlines, transportation trade associations and business groups complained that the their approach was unworkable. Although the IRS reserves the right to reassert the position that miles should be taxed, for all practical purposes, it will continue to exempt these miles from tax. The IRS must develop an administratively feasible way to tax these miles; otherwise, it is not a likely possibility for the foreseeable future.
For more information, contact The Henssler Financial Group Tax & Accounting Division
From: http://www.henssler.com/radio/032709/tax-content.asp
Further, our own Randy Petersen has this to say about winning miles:
If you read the fine print of the United Mileage Plus program, these miles are not your property they belong to United. Because the miles are not your property, it would be difficult for them to constitute a taxable base. This and a few other reasons are exactly why the IRS has no policy to establish taxation on "miles."
From: http://www.usatoday.com/travel/fligh...sk-randy_x.htm
Doing more research, I kept running into the phrase "in-kind promotional benefits are not taxable unless converted to cash".
Cali
#82
Join Date: Aug 2004
Posts: 508
Is this for your savings or checking account?
Is this for your savings or checking account? 250.00 for 10k miles seems abt much.
I received a 1099-INT for $250 for 10K miles. Was it incorrect for them to issue a 1099-INT since it wasn't interest? Should it have been a 1099-MISC?
The reason I ask is the IRS did make it sound like they could send a letter back to the issuer for any form of 1099 other than INT!
Thanks
The reason I ask is the IRS did make it sound like they could send a letter back to the issuer for any form of 1099 other than INT!
Thanks
#83
Join Date: Jan 2011
Location: LAX
Programs: Delta Silver, Marriott Gold, HH Diamond, Ex-UA Gold, Ex-AA Gold , Ex-SPG Gold, Peon everywhere else
Posts: 616
So is it safe to assume if you receive a 1099 for these miles and if your miles expire, then you will be able to write then off on your tax return.
#84
A FlyerTalk Posting Legend
Join Date: Feb 2001
Location: Berkeley, CA USA
Programs: Piggly Wiggly "Shop the Pig!" Preferred Shopper
Posts: 56,898
Of course Citibank's cpm is not $0.025 -- that's roughly the retail price at which airlines will sell their miles to you. Another inappropriate measure is the liability airlines record on their books for the miles. That's a tiny amount that merely reflects the extra cost of having an extra person show up on a plane for free.
That's too low. It's about 20% of the retail price and less than half of what you see with the mileage brokers. I've used $0.015 recently.
#85
A FlyerTalk Posting Legend
Join Date: Feb 2001
Location: Berkeley, CA USA
Programs: Piggly Wiggly "Shop the Pig!" Preferred Shopper
Posts: 56,898
Not safe at all; you had something of value and you let it go to waste. It'd be like getting a free bike as interest, leaving it outside and letting the weather ruin it. You owe taxes on the bike, regardless.
#86
A FlyerTalk Posting Legend
Join Date: Feb 2001
Location: Berkeley, CA USA
Programs: Piggly Wiggly "Shop the Pig!" Preferred Shopper
Posts: 56,898
I can't find any specific rulings by the IRS, but I would be inclined to put my faith into someone like this:
The IRS is on record that, until further notice, it will not include frequent flyer miles in anyone's income. * * *.
For more information, contact The Henssler Financial Group Tax & Accounting Division
From: http://www.henssler.com/radio/032709/tax-content.asp
The IRS is on record that, until further notice, it will not include frequent flyer miles in anyone's income. * * *.
For more information, contact The Henssler Financial Group Tax & Accounting Division
From: http://www.henssler.com/radio/032709/tax-content.asp
Further, our own Randy Petersen has this to say about winning miles:
[I]If you read the fine print of the United Mileage Plus program, these miles are not your property — they belong to United. Because the miles are not your property, it would be difficult for them to constitute a taxable base.
[I]If you read the fine print of the United Mileage Plus program, these miles are not your property — they belong to United. Because the miles are not your property, it would be difficult for them to constitute a taxable base.
#87
Join Date: Dec 2005
Location: FLL
Programs: AA PLT 2.7 MM, DL GLD, UA Prem, BW Diamond, PC PLT, HH Diamond
Posts: 1,285
Has anyone gotten a 1099 for bonus miles related to a citi mortgage? I got a 150K deal and it stated they may send a 1099. How would I know for sure? Has anyone gotten one and what value did they assess the bonus at?
#88
Join Date: Dec 2008
Posts: 377
If Citi AAdvantage credit cardholders who received a bonus in 2011 could post if they receive a 1099, for how many miles, and at what valuation, it would be very useful and appreciated by many of us considering applying for a Citi AAdvantage card in 2012.
#89
A FlyerTalk Posting Legend; Moderator: American Express, Capital One, Citi, Chase, Credit Card Programs, Diners Club, Signatures
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,884
If you review the thread I think you will find that Citi does not issue 1099's for credit card bonuses or earnings, only for miles or points awarded in connection with opening a bank account. The thread explores the basis for this distinction.