[Consolidated] 1099s for miles & cash rewards from all banks
#121
Original Member
Join Date: May 1998
Posts: 1,139
Follow up on post #93. I was kinda correct about 25,000 miles but it actually was a $600 minimum which I read in a letter Citi had sent me - I dug it up - here is the relevant excerpt...
"In response to your inquiry, the fair market value of 23,500 AAdvantage miles is $587.50. Citibank is required by federal tax law to send to customers and file with IRS Form 1099-MISC when the individual receives miscellaneous income of $600.00 or greater in a tax year. Under IRS rules, the payment of miles associated with this particular promotion is considered to be miscellaneous income and reportable on Form 1099-MISC."
This is an important clarification - Does this mean that awards below 24,000 miles (valued at $600) will not attract a 1099? This seems to conflict with those who have posted above that they received 1099s for an award of 10,000 miles (Post #77 - only valued at $250), and 20,000 miles (Post #92). Could this be because in addition to the 10,000/20,000 miles, these individuals received at least 14,000/4,000 miles from other accounts or from other Citibank promotions?
Or is the $600 minimum not really enforced and does Citi send out even for smaller amounts?
"In response to your inquiry, the fair market value of 23,500 AAdvantage miles is $587.50. Citibank is required by federal tax law to send to customers and file with IRS Form 1099-MISC when the individual receives miscellaneous income of $600.00 or greater in a tax year. Under IRS rules, the payment of miles associated with this particular promotion is considered to be miscellaneous income and reportable on Form 1099-MISC."
This is an important clarification - Does this mean that awards below 24,000 miles (valued at $600) will not attract a 1099? This seems to conflict with those who have posted above that they received 1099s for an award of 10,000 miles (Post #77 - only valued at $250), and 20,000 miles (Post #92). Could this be because in addition to the 10,000/20,000 miles, these individuals received at least 14,000/4,000 miles from other accounts or from other Citibank promotions?
Or is the $600 minimum not really enforced and does Citi send out even for smaller amounts?
#122
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#123
Join Date: Aug 2010
Posts: 275
Same here on the first part, second part was my fault, I didn't see the warnings or I wasn't looking for any (ignorance is bliss, until you get a 1099-MISC).
Called up and got the song and dance that it is required of them and nothing they can do to change it.
I do see some posts from last year showing that they got amended 1099-MISCs down to $0, but I don't see any from this year. Wonder if Citibank has informed it's employees/supervisors to not allow that to happen this year?
I've been reading these threads and saw this link pop up: http://boardingarea.com/blogs/viewfr...le-to-the-irs/ Has anyone had any luck from the IRS's side in getting a 1099-MISC amended through Citibank or was it only from speaking with Citibank?
Called up and got the song and dance that it is required of them and nothing they can do to change it.
I do see some posts from last year showing that they got amended 1099-MISCs down to $0, but I don't see any from this year. Wonder if Citibank has informed it's employees/supervisors to not allow that to happen this year?
I've been reading these threads and saw this link pop up: http://boardingarea.com/blogs/viewfr...le-to-the-irs/ Has anyone had any luck from the IRS's side in getting a 1099-MISC amended through Citibank or was it only from speaking with Citibank?
#124
Join Date: Jul 2006
Location: Upper Sternistan
Posts: 9,980
What I'd really like to find out from Citi is exactly WHICH miles/points this 1099 is for. Has anyone cracked that nut?
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
#125
Join Date: Aug 2010
Posts: 275
What I'd really like to find out from Citi is exactly WHICH miles/points this 1099 is for. Has anyone cracked that nut?
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
#126
A FlyerTalk Posting Legend
Join Date: Feb 2001
Location: Berkeley, CA USA
Programs: Piggly Wiggly "Shop the Pig!" Preferred Shopper
Posts: 56,890
I don't see why a mileage bonus for opening a checking account should be considered miscellaneous income while a similar bonus for opening a credit card should not. Seems to me that neither should be income to the recipient.
On the other hand, the BankDirect monthly mileage bonus for Mileage Checking sure looks like taxable interest to me. It is something of value paid in return for depositing money with a bank, and the amount of miles is a direct function of how much you have on deposit. That's interest in my book.
It's important to remember that 1099s (received or not received) do not determine your taxable income. They are rather an important compliance mechanism for the IRS. A significant difference between what the IRS sees in your 1099s and your tax return will likely trigger an automated request for explanation. Still, it's the tax laws and regulations that determine your tax liability, not necessary what is or is not on your 1099s.
On the other hand, the BankDirect monthly mileage bonus for Mileage Checking sure looks like taxable interest to me. It is something of value paid in return for depositing money with a bank, and the amount of miles is a direct function of how much you have on deposit. That's interest in my book.
It's important to remember that 1099s (received or not received) do not determine your taxable income. They are rather an important compliance mechanism for the IRS. A significant difference between what the IRS sees in your 1099s and your tax return will likely trigger an automated request for explanation. Still, it's the tax laws and regulations that determine your tax liability, not necessary what is or is not on your 1099s.
#127
Join Date: Jul 2006
Location: Upper Sternistan
Posts: 9,980
Let's hope the CC division doesn't try this same road.
#128
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Join Date: Feb 2001
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Anyone remember the old days when banks would give you household items like a nice toaster when you opened an account? I suspect they didn't include the value of the bonus item in 1099s, but I don't have any personal experience with it.
Last edited by dhuey; Jan 21, 2012 at 7:16 pm Reason: grammar
#129
Join Date: Oct 2011
Location: North Carolina
Posts: 613
View From the Wing has an article on "How to Dispute the Value of Miles or Prizes Reported as Taxable to the IRS."
http://boardingarea.com/blogs/viewfr...le-to-the-irs/
http://boardingarea.com/blogs/viewfr...le-to-the-irs/
#130
Join Date: Jun 2002
Location: California
Posts: 264
I don't know what banks did in the old days, but if a bank gives you a toaster for opening an account these days, they will issue a 1099 if you're over the $10 or $600 threshold. And they will likely value it at something unreasonably high. :-) Not so if you get a toaster for opening a credit card. The two industries are (as you note) regulated very differently.
Last edited by ss; Jan 21, 2012 at 9:19 pm
#131
Join Date: Jun 2002
Location: California
Posts: 264
Your situation was quite unusual, and not relevant to people who receive 1099s that show the value that Citi intended.
#132
Join Date: Dec 2007
Location: Milpitas, CA USA & Milano, Italy
Programs: CO Gold
Posts: 30
Just to add another data point:
- received 1099-MISC today for 40Kmiles --> valued at $1000
- called Citi, escalated to the supervisor, no use.. He even had severe problems getting to explain the $1000 since he was doing the wrong calculation of 0.025 cents per mile. His 3rd grade teacher will be screaming from her grave
The account has already been closed, I have no further business with Citi. I wish I could return the 40Kmiles and get taxable $1000... but of course this can never happen.
From the numerous threads its sound like I need to swallow it but I'm now afraid that I'll get another 1099 from Fidelity for the 50K Delta miles...
- received 1099-MISC today for 40Kmiles --> valued at $1000
- called Citi, escalated to the supervisor, no use.. He even had severe problems getting to explain the $1000 since he was doing the wrong calculation of 0.025 cents per mile. His 3rd grade teacher will be screaming from her grave
The account has already been closed, I have no further business with Citi. I wish I could return the 40Kmiles and get taxable $1000... but of course this can never happen.
From the numerous threads its sound like I need to swallow it but I'm now afraid that I'll get another 1099 from Fidelity for the 50K Delta miles...
#133
Join Date: Apr 2007
Posts: 560
Or is 1099-INT only for real "hard" cash earned as interest and therefore not applicable to the 23,500 checking miles?
#134
Join Date: Apr 2001
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What I'd really like to find out from Citi is exactly WHICH miles/points this 1099 is for. Has anyone cracked that nut?
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
I've got tons of different credit cards (maybe 8) and accounts (probably 5) that could have been the source of this, and I'd like to know, so I won't repeat those this year.
I haven't received a 1099 this year or in previous years from Citi, so by my data point, 1099's are only issued for opening checking accounts, not credit cards.
#135
Join Date: Feb 2001
Location: Santa Cruz CA USA
Posts: 1,643
[QUOTE=marcel;17861553]Just to add another data point:
I wish I could return the 40Kmiles and get taxable $1000...
If you itemize, could the miles be donated for a $1000 deduction? It just wouldn't be in the same tax year.
I received a 1099-INT from Chase for a checking account bonus of $125. It is legitimate though I wasn't expecting it and was surprised.
I haven't yet received anything relating to miles bonuses on credit cards or miles bonuses from brokerage houses and those forms don't usually come for another few weeks.
Sylvia
I wish I could return the 40Kmiles and get taxable $1000...
If you itemize, could the miles be donated for a $1000 deduction? It just wouldn't be in the same tax year.
I received a 1099-INT from Chase for a checking account bonus of $125. It is legitimate though I wasn't expecting it and was surprised.
I haven't yet received anything relating to miles bonuses on credit cards or miles bonuses from brokerage houses and those forms don't usually come for another few weeks.
Sylvia