• filter:
  • Page :
  • 1
  • Text Only
  • Search this Topic »
Voting History
rated:
So I just read thru the original thread and wondered if anybody in fact did get a 1099 in Jan from BofA for their credit card rewards redemptions?

The original post was just talking about Cash Rewards to checking being taxed when over $600.  But a later post by mmtraxx goes even further and says even statement credit will trigger a 1099.

I'm interested because I've been accumulating Travel Rewards points for a long time and am finally able to offset about 1k in travel charges.  But if this will somehow end up with a 1099, I will only offset $500 for now and maybe wait till next year to do the rest.
 

Member Summary
Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
I believe credit card rewards are considered "rebates" and thus are not taxable. However, most checking/savings bonuses are considered "interest" in some way and thus are 1099'd.

rated:
If it's from a CC, it's a rebate, and not taxable. The key (from judges comments) is whether or not you had to spend money to get the rewards or not. IANAL

that being said, I did not receive a 1099 for rewards received from BOA CCs in 2016.

rated:
Just to be clear, even though CC points have not been taxed in the past, the original thread pointed out that BofA changed the fine print on their CCs. The thread then reports on several calls into CSRs, which were unsurprisingly all contradictory. So it seems the best way to know for sure is to see if there's any empirical evidence, ie. a definite yes or definite no of 1099s from people who redeemed >$600 last year.

rated:
https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/...


I just reviewed the T&C @ BOA, and I only see the 1099 is only listed in the "Bonus Cash Rewards Offer" section that talks about how much $$ I'll earn after spending in 90 days. I'm not aware of any BOA product that had a bonus offer of more than $600, so I doubt anyone got a 1099 from any one card. I did not get a 1099.

There's no mention of 1099 in the "How You Earn Cash Rewards" section, which is the portion talking about how you earn points based on normal spending. The only way anyone would get over $600 in 2016 from BOA on a single card would be from normal spending.

rated:
Consumers need to push back and have platforms to share the financial risks of battling the IRS. For example, a bank signup promo isn't interest just because the bank says so. It's flat rate money for the efforts in switching. But everyone goes along anyway.

rated:
bobley said:   Consumers need to push back and have platforms to share the financial risks of battling the IRS. For example, a bank signup promo isn't interest just because the bank says so. It's flat rate money for the efforts in switching. But everyone goes along anyway.
  It would still be income. If you want to reclassify it as non-interest income you may be able to do that, but it's usually not worth whatever benefit you may get from reclassifying it.

rated:
libralibra said:   [...] wondered if anybody in fact did get a 1099 in Jan from BofA for their credit card rewards redemptions?
I did not get 1099 for my rewards cash redemptions.

rated:
marginoferror said:   
bobley said:   Consumers need to push back and have platforms to share the financial risks of battling the IRS. For example, a bank signup promo isn't interest just because the bank says so. It's flat rate money for the efforts in switching. But everyone goes along anyway.
  It would still be income. If you want to reclassify it as non-interest income you may be able to do that, but it's usually not worth whatever benefit you may get from reclassifying it.

  What do banks gain by calling it interest?

rated:
Lots of credit card rewards received in 2016.  Not a single 1099 came my way.

rated:
bobley said:   
marginoferror said:   
bobley said:   Consumers need to push back and have platforms to share the financial risks of battling the IRS. For example, a bank signup promo isn't interest just because the bank says so. It's flat rate money for the efforts in switching. But everyone goes along anyway.
  It would still be income. If you want to reclassify it as non-interest income you may be able to do that, but it's usually not worth whatever benefit you may get from reclassifying it.

  What do banks gain by calling it interest?

Don't know - never dealt with financial institutions. I have a few guesses, but they are just guesses.

I could see the possibility of the tax/accounting departments having no idea how to treat the expenses, and since most disbursements from the bank into deposit accounts are interest, it would make sense that it would be called interest. To be fair, I don't even know what the actual definition of "interest" is. There's also the possible argument that, because there's a flat fee for each 1099 missed, they want to send out 1099s in case it could be considered interest so they just decide to treat it as interest to be on the safe side.

However, I would imagine at this point (unless there's some specific rule that says to treat it as interest) that it's just banks copying the standard practice of other banks, and banks rolling forward their prior year practices each year.

rated:
bobley said:   
marginoferror said:   
bobley said:   Consumers need to push back and have platforms to share the financial risks of battling the IRS. For example, a bank signup promo isn't interest just because the bank says so. It's flat rate money for the efforts in switching. But everyone goes along anyway.
  It would still be income. If you want to reclassify it as non-interest income you may be able to do that, but it's usually not worth whatever benefit you may get from reclassifying it.

  What do banks gain by calling it interest?

  Because it is -- a really high short term teaser rate. 

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017