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[Consolidated] 1099s for miles & cash rewards from all banks

[Consolidated] 1099s for miles & cash rewards from all banks

Old Feb 28, 2011, 1:09 pm
  #76  
 
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Originally Posted by laurajoyce
I find this incredibly irritating and plan to close my account this week. I earned the first 15k at some point last year but have yet to receive a 1099. Should I still expect it? (We're sending our tax info off this week to the accountant)
Your 15K miles would only translate to $375 (at 2.5 cpm) and Citi has indicated (to me anyway) that, while they *could* issue a 1099-MISC for any amount, they will not issue one if the total valuation of FF miles on an annual, per-taxpayer-ID basis is less than $600. Datewise, in order to avoid penalties, 1099's are requried to be sent to receipients no later than Feb 1, 2011 (with some exceptions). Note that lack of a 1099 does not mean you do not have any tax liability. Your tax preparer should be able to give you guidance on how to report (or not) the value of the miles.


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.
If you really want to blow off some steam, you could write a letter or e-mail to Citi's CSR dept (the addresses should be obtainable from their website) or you can call the Executive Action Response Unit (or is it Exec Resp Action Unit?) at 718-248-0847.
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Old Feb 28, 2011, 1:38 pm
  #77  
 
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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
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Old Feb 28, 2011, 1:53 pm
  #78  
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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.
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Old Mar 12, 2011, 9:11 am
  #79  
 
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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)
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Old Apr 14, 2011, 10:12 am
  #80  
 
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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.
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Old Apr 15, 2011, 2:04 am
  #81  
 
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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
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Old Apr 15, 2011, 11:36 am
  #82  
 
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Is this for your savings or checking account?

Is this for your savings or checking account? 250.00 for 10k miles seems abt much.

Originally Posted by gunpig
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
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Old Apr 15, 2011, 12:24 pm
  #83  
 
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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.
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Old Apr 15, 2011, 12:45 pm
  #84  
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Originally Posted by flyerfrog
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.
IRS phone agents are wrong about 1/3 of the time, and this one is here -- at the very least, what she is saying is highly misleading. What matters is the fair market value of the miles. That's not so easy to determine with FF miles because the rules of the program prohibit the free exchange of the miles. Nevertheless, there are mileage brokers out there, and miles are being bought and sold left and right. In my opinion (rely on it at your own risk), this market is the best way to determine miles' fair market value.

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.


Originally Posted by flyerfrog
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.
That's highly proprietary information; no way will Citibank release that.

Originally Posted by flyerfrog
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.
This one she got right. If you are reporting a lower interest amount than on a 1099-INT, it's a very good idea to include a statement at the end of your return explaining the difference. If you don't you will probably get an automated request for either a correction or explanation.

Originally Posted by flyerfrog
I'll be using my estimate of miles valuation at $0.005, which lowers my 1099-INT amount to $25 from $125.
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.
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Old Apr 15, 2011, 12:49 pm
  #85  
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Originally Posted by eknock007
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.
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.
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Old Apr 15, 2011, 12:58 pm
  #86  
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Originally Posted by CaliC
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
This is all correct, but I think it is not relevant. This IRS position was with regard to employee compensation only. The idea there was that the IRS considered it too administratively burdensome for everyone involved to treat these employee-earned miles as taxable compensation. The IRS did not say this ruling would apply in any other context, and I think it is very questionable to infer that they would take this position where miles are paid as interest.

Originally Posted by CaliC
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 just exchanged United miles for an F seat on Emirates, roundtrip, San Francisco to Dubai. This would cost a small fortune if you pay cash for it, even via a consolidator. Miles are property for tax purposes, no matter what the airlines, Randy or anyone else have to say about it.
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Old Jan 18, 2012, 5:05 am
  #87  
 
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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?
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Old Jan 18, 2012, 8:58 am
  #88  
 
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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.
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Old Jan 18, 2012, 2:12 pm
  #89  
mia
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Originally Posted by I can see for miles
If Citi AAdvantage credit cardholders who received a bonus in 2011 ...
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.
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Old Jan 18, 2012, 3:47 pm
  #90  
 
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Sorry about that. Didn't read the entire thread.
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