23 thoughts on “PSA: Bank of America Issues 1099-INT Forms for Bank Bonuses That Earn Miles

  1. Would you not have reported the income if you hadn’t received the 1099? Bank account bonuses are legally considered interest (and are therefore taxable) regardless of the amount and regardless of whether you receive a 1099-INT

    Like

    • In the past, I chose not to declare the value of miles as interest on bank bonuses. The valuations are subjective (could one argue worthless until redeemed?) and I am comfortable with my approach when it comes to my filing my tax return. That said, I do recognize your point and highly suggest everyone should consult with their accountant before making a decision.

      Like

      • Fair enough – obviously up to you to decide how to fill out your tax return (though I don’t agree with your rationale) – just commented because there seems to be a lot of misinformation online that suggests bank bonuses (and interest in general, for that matter) are not taxable as long as you don’t receive a 1099, which is false.

        Like

      • I chase bank bonuses as much as the next guy, just recognize that my benefit is reduced by my tax rate. I also avoid miles-based bank bonuses for this reason and stick with cash and/or Thank You points which are then redeemed for cash or cash-value flights

        Like

        • I got the same from my Virgin Atlantic miles (I was sadly not targeted for the AS offer). The VS miles were valued the same ($250). I not sure why you are surprised because as I recall the terms stated they would issue a 1099. As you note the bright side here is that they only valued them at a penny a point so my cost per mile is still pretty low.

          Like

          • You might be right about the terms but I was surprised because even Citibank doesn’t issue a 1099 for mileage bonuses on bank accounts and I didn’t expect BofA to.

            Like

    • My reply is meant for the original poster (couldn’t find a reply button). I went through much agony before finally following through with my Citi bank AA 50,000 mile sign-up bonus (through my Citi checking account). I spent countless hours talking with and emailing back and forth with various people from Citibank as well as AA. Most people who thought (most seem not to, think that is) it through said it seemed likely city would report this as income on a 1099. But, of course they couldn’t be sure. I finally received an answer, in writing which I had requested, from someone at city (can’t remember his title) who said that’s if they were going to be counted as monetary income i.e. reportable to the IRS it would’ve said so in the offer. And since my offer mentioned nothing about it he said that it would not be reported. All this remains to be seen as the people who think it would be reported said it would not be reported until I read deemed those miles for a flight. When I asked about how they would know which of the many many AA miles I was using for any given flight they either professed not to know or supposed it would be the 1st 50,000 miles I redeemed. I’m not at all comfortable with Citi’s response to my inquiries. I will probably close my account by next month as I don’t like doing business with entities that are not clear about such important matters. In any case, glad to hear you’ve not yet received a 1099 and hope you do not

      Like

  2. […] PSA: Bank of America Issues 1099-INT Forms for Bank Bonuses That Earn Miles by Points With A Crew. Value of 1¢ per mile is very fair and reasonable, not such a big deal I don’t think. I actually prefer it when I get a 1099-INT for a non cash bank bonus (with a fair valuation), otherwise it’s difficult to value it fairly for tax purposes. […]

    Like

  3. Have yet to see them for the 5 accounts we have 🙂 I have a big pile of mail that I need to go thru. Will let you know. Thanks Jonathan On Jan 20, 2016 6:59 AM, “PointsCentric” wrote:

    > Ralph posted: “Last year, my wife was targeted with an offer of 25,000 > Alaska Airlines miles for opening a Bank of America Checking account and > completing a few, easy requirements. I ended up closing the account about 5 > months later, used the miles to help book this awe” >

    Like

  4. […] Bank of America issuing IRS form 1099-INT for checking account signup bonuses. That’s probably correct on the law, and strictly speaking the tax you owe the federal government has nothing to do with what a bank does or not report to the IRS. But many folks will wind up paying taxes purely because these bonuses get reported. […]

    Like

  5. I’m sure you would have to use the points before a 1099 is triggered, which in your case you did.

    Like

    • I don’t think that is true (though I definitely used them). Once BofA post the miles to my Alaska account, how do they know when I used them to book a ticket? Or what if I later cancelled the ticket?

      Like

      • Ralph they do not that is why they can not value the miles and thus why they can not 1099 you on them. See my post below

        Like

        • I see your argument and while it might very well be valid, I’m not going to put up a fight about it. If the 1099 was for $750 or some other ridiculousvalue for miles, I’d be more inclined to fight but I am ok accepting this amount as income

          Like

    • That would be like cash not being income until you spend it. The bank won’t even know you redeemed miles. Plus points are fungible and if you had lots of points nobody could identify which points you used.

      Like

  6. Is this for bank accounts only?? I got the Alaska credit card for 25,000 miles. I thought the IRS said CC bonuses are considered a rebate and not income. Although the Alaska card had no minimum spending requirement.

    Like

  7. BOA must follow the rules of the 1099-INT which it did not follow:

    “Amounts of $10 or more” miles were posted; no transactions were made in US currency or the currency of any other country.

    Paid or credited” – no monetary fund’s meet this requirement.

    “Without any substantial limitation or restriction as to the time” miles expire, are revoked limited as to date time and who can use them and how they can be used.

    I would request a corrected 1099-INT form from BOA based on the incorrect reporting on their side. If that does not happen then I would report the 1099-INT on Schedule B as follows:

    BOA Account #XXXXXXXX $250.00

    Less BOA Account #XXXXXX -Failure to comply with reporting of interest income per IRS 1099-INT Instructions paid or credited and without any substantial limitation or restriction as to the time” ($250.00)

    Resulting in a NET reporting of ZERO

    Per the IRS 1099-INT Instructions:
    Include amounts of $10 or more, whether or not designated as interest that are paid or credited to the person’s account by savings and loan associations, mutual savings banks not having capital stock represented by shares, building and loan associations, cooperative banks, homestead associations, credit unions, or similar organizations. Include interest on bank deposits, accumulated dividends paid by a life insurance company, indebtedness (including bonds, debentures, notes, and certificates other than
    Those of the U.S. Treasury) issued in registered form or of a type offered to the public, or amounts from which you withheld federal income tax or foreign tax. In addition, report interest of $10 or more attributable to a TIH of a WHFIT, or accrued by a real estate mortgage investment conduit (REMIC), a financial asset securitization investment trust (FASIT) regular interest holder, or paid to a collateralized debt obligation (CDO) holde

    When is a payment made? Generally, interest is paid when it is credited or set apart for a person without any substantial limitation or restriction as to the time, manner, or condition of payment. The interest must be made available so that it may be drawn on at any time and its receipt brought within the control and disposition of the person.

    Like

  8. The IRS positon has been to NEVER value FF miles or include them as income. This goes back to 2002

    https://www.irs.gov/pub/irs-drop/a-02-18.pdf

    CPA With 29 years tax experience

    Like

    • +1. Miles and points earnings aren’t taxable, period. If they were you would then be able to deduct tickets purchased with points if they were for a business trip. You can fight it, but at that value is probably not worth the hassle.

      Like

  9. Fantastic suggestions . I loved the info , Does anyone know where my business could possibly grab a template IRS 1099-INT version to fill out ?

    Like

Leave a Reply!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s