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

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

Old Feb 20, 11, 1:52 pm
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[Consolidated] 1099s for miles & cash rewards from all banks

Checking --- No 1099. Correct?

Savings --- Yes 1099. Miles valued at 2.5 cents. Correct?

Thanks.
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Old Feb 20, 11, 2:05 pm
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if you earn interest/dividends on any account there will be an 1099 issued (if $1 or more).
Mile bonues do not carry a value and do not generate an 1099.
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Old Feb 20, 11, 2:16 pm
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Originally Posted by WineCountryUA View Post
if you earn interest/dividends on any account there will be an 1099 issued (if $1 or more).
Mile bonues do not carry a value and do not generate an 1099.
You sure about that? Most FI's do not issue 1099's for less than 10. Citi has been issuing 1099's for savings and checking bonuses including for miles.
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Old Feb 20, 11, 2:26 pm
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Originally Posted by QL_714 View Post
You sure about that? Most FI's do not issue 1099's for less than 10. Citi has been issuing 1099's for savings and checking bonuses including for miles.
Have you actually received a 1099 for miles?
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Old Feb 20, 11, 2:33 pm
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Originally Posted by thebat View Post
Have you actually received a 1099 for miles?
For a 40k checking bonus last year, YES!
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Old Feb 20, 11, 3:53 pm
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Originally Posted by QL_714 View Post
For a 40k checking bonus last year, YES!
How much did they value your 40k miles?
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Old Feb 20, 11, 4:00 pm
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I've heard that if Citi isses you a 1099 for bonus miles, you can appeal and have them decrease the value of the miles (possibly even down to 0 cents per mile). Can anyone confirm this?

As for other questions/comments...although some banks only generate and send 1099's for interest earned above $10, you may still be obligated to report interest below that threshold to the IRS anyway.
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Old Feb 20, 11, 7:22 pm
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IRS requires a 1099-INT be issued for amounts at $10 and over.
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Old Feb 21, 11, 8:46 am
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Originally Posted by vortix View Post
I've heard that if Citi isses you a 1099 for bonus miles, you can appeal and have them decrease the value of the miles (possibly even down to 0 cents per mile). Can anyone confirm this?
There are mixed reports on this, some people were able to get Citi to decrease the value whereas others were not so lucky and Citi stood firm on the 1099
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Old Feb 21, 11, 9:38 am
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Originally Posted by HoKo View Post
There are mixed reports on this, some people were able to get Citi to decrease the value whereas others were not so lucky and Citi stood firm on the 1099
So if you received 40K in miles, how much in taxable income in $ is that equivalent to? $1000? Which means if you pay say, 35% in taxes, that comes out to $350 that you have to pay for the 40K miles? That makes it barely worth it to seek out the promotion.

Is my math right?
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Old Feb 21, 11, 9:58 am
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Originally Posted by FrequentFlyer9000 View Post
So if you received 40K in miles, how much in taxable income in $ is that equivalent to? $1000? Which means if you pay say, 35% in taxes, that comes out to $350 that you have to pay for the 40K miles? That makes it barely worth it to seek out the promotion.

Is my math right?
Yes the math is correct. As for whether or not this would make it "worth it" that's a subjective matter that everyone has to evaluate for themselves.

It all depends on how effectively you use your miles, if you used that 40K to get an AA low-season award to Europe then it might be worth it to many people.
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Old Feb 21, 11, 10:42 am
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Originally Posted by HoKo View Post
Yes the math is correct. As for whether or not this would make it "worth it" that's a subjective matter that everyone has to evaluate for themselves.

It all depends on how effectively you use your miles, if you used that 40K to get an AA low-season award to Europe then it might be worth it to many people.
Oh I agree with you, it's just extremely sneaky to claim someone is getting 40,000 miles without expressly explaining in big print that this is taxable using an assumption of $.025 value per mile given.

I am pretty sure a much lower number of people would have signed up for the deal had they known they were paying $350 for 40K miles than $0. Thanks to FT I now know to avoid checking account offers like this.
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Old Feb 21, 11, 11:27 am
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Originally Posted by FrequentFlyer9000 View Post
Oh I agree with you, it's just extremely sneaky to claim someone is getting 40,000 miles without expressly explaining in big print that this is taxable using an assumption of $.025 value per mile given.

I am pretty sure a much lower number of people would have signed up for the deal had they known they were paying $350 for 40K miles than $0. Thanks to FT I now know to avoid checking account offers like this.
Actually it is in the fine print about bonus is taxable at Fair Market Value. The Fair Market Value Citi used is an established price AA sells the miles at regular price - so that stands up to IRS rules.

Of course majority of folks do not bother to read the fine print let alone think of the consequences when they jump on "deals".

Bonuses associated to BANKING PRODUCTS, meaning Checking, Saving, Money Market etc, are subject to tax. And of course the tax owed depends on the recipient's tax bracket.
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Old Feb 21, 11, 2:29 pm
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Originally Posted by Happy View Post
Bonuses associated to BANKING PRODUCTS, meaning Checking, Saving, Money Market etc, are subject to tax. And of course the tax owed depends on the recipient's tax bracket.
Bottom line: No Citi banking products for me!
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Old Feb 21, 11, 2:46 pm
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I must have missed the IRS ruling that differentiates mileage bonuses on banking products from brokerage products, credit card products, loan products, hotel stays, rental car activity, etc.

Would you be so kind to post it?

(Thank goodness BankDirect got an exemption from that rule.)
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