Citibank 1099

[AsherO]

AA sets the value at 2.5 not Citi. Citi used to offer 40k and 25k promotions for different types of checking accounts, and those are the ones that hit in 2011 and are getting 1099s now. In begining of 2011, Citi marketing realized this and the potentially disastrous PR and stopped launching offers over 24k (that's why 23,500 was the offer in the 2nd half of last year lol).

As far as class action law suit, the T&C always said "customers are responsible for taxes, if any." - so there goes that. You've been warned.

They may go back to raising the offer over 25k, look out for a 30k Citigold offer in your citi credit card statements, february e-mails and a direct mail in march or april (if you don't have a checking account), with better, clearer language in t&C (maybe something like... "this WILL generate a 1099 MISC and be reported to the IRS").

If it's below $600 they don't 1099 you? Does this mean if I only do 23.5k offers I shouldn't expect a 1099?

[HelpMe]

If it's below $600 they don't 1099 you? Does this mean if I only do 23.5k offers I shouldn't expect a 1099?

Correct.

[Side incomer]

As far as class action law suit, the T&C always said "customers are responsible for taxes, if any." - so there goes that. You've been warned.

with better, clearer language in t&C (maybe something like... "this WILL generate a 1099 MISC and be reported to the IRS").

Class action lawsuit could claim: 1. nobody knew that Airline miles are taxable, which in fact they are not currency, and they aren't considered earned income, especially that the airlines forbid to get cash out of them.
2. Citi pays for them no more the 1 cent per mile, so they are not aloud to 1099 people in the amount of 2.5, where they actually didn't have business expenses in that amount.

[smurf]

Correct.

even if you do multiple offers in one year?

[Side incomer]

If it's below $600 they don't 1099 you? Does this mean if I only do 23.5k offers I shouldn't expect a 1099?

Not true. People that have done these offers have also gotten 1099'd.
Like the savings accounts etc. you get 1099'd for every penny.

[AsherO]

Correct.

Thanks. Now I need to decide if it's worth the hassle (and account fees) for 23.5k. Do they ever pull credit? How many times a year is this churnable?

Class action lawsuit could claim: 1. nobody knew that Airline miles are taxable, which in fact they are not currency, and they aren't considered earned income, especially that the airlines forbid to get cash out of them.

IANAL but I don't think we'd have a case.

2. Citi pays for them no more the 1 cent per mile, so they are not aloud to 1099 people in the amount of 2.5, where they actually didn't have business expenses in that amount.

When you pay taxes on a reward/prize, you pay based on the ARV, which they're arguing is 2.5.

Not true. People that have done these offers have also gotten 1099'd.
Like the savings accounts etc. you get 1099'd for every penny.

You should be quoting smurf, I was asking the question.

When you say 'savings accounts' you're referring to interest? I'm specifically asking about Citi banking bonuses for opening accounts, for interest I know they 1099 you even for a cent.

[HelpMe]

Not true. People that have done these offers have also gotten 1099'd.
Like the savings accounts etc. you get 1099'd for every penny.

Wouldn’t this be considered an award? Awards under 600 do not require a 1099.

[AsherO]

Wouldn’t this be considered an award? Awards under 600 do not require a 1099.

Just to clarify, I'm not so concerned with the legalities as much as I'm wondering what Citi does in this case, but feel free to discuss the legalities as well.

[HelpMe]

even if you do multiple offers in one year?

If it totals over 600 you should receive a 1099.

[smurf]

also what about chase cash bonuses for opening an account? How come I got 1099d if its only 150?

[Side incomer]

Wouldn’t this be considered an award? Awards under 600 do not require a 1099.

Required or not, they are giving out. simple.

[HelpMe]

also what about chase cash bonuses for opening an account? How come I got 1099d if its only 150?

It is not an award.

ETA: Chase will issue you a 1099-INT.

[smurf]

It is not an award.

ETA: Chase will issue you a 1099-INT.

they consider it an interest payment?

[HelpMe]

they consider it an interest payment?

If you received a cash bonus, YES.

[AsherO]

If it totals over 600 you should receive a 1099.

Weird, since each 'award' is less than $600...

Required or not, they are giving out. simple.

You're saying they give them out for the sub-$600 23.5k AA offers? Then why give a weird amount like 23.5k?

[HelpMe]

What is everyone receiving, a 1099-MISC?

[HelpMe]

If you did not redeem the miles in 2011 you should not receive a 1099-MISC. The miles have no value until you redeem them. Also did you redeem them at a rate of lower than 2.5 cents? You can fight this on many fronts.

[AsherO]

If you did not redeem the miles in 2011 you should not receive a 1099-MISC. The miles have no value until you redeem them. Also did you redeem them at a rate of lower than 2.5 cents? You can fight this on many fronts.

You're talking ideally. If Citi is sending them out then they're sending them out. You need to consider that as a factor and decide if you still want to apply (considering you'll have to fight the 1099 or pay up).

[HelpMe]

You're talking ideally. If Citi is sending them out then they're sending them out. You need to consider that as a factor and decide if you still want to apply (considering you'll have to fight the 1099 or pay up).

Sorry, I don’t look at it that way. I only care what is allowed under current regulations. I am not going to accept what Citi or any FI does as fact. Knowledge is power!!!

[AsherO]

Sorry, I don’t look at it that way. I only care what is allowed under current regulations. I am not going to accept what Citi or any FI does as fact. Knowledge is power!!!

The fact is they do it. When you get the 1099 you either have to:

1. Pay it, in which case it cost you money.
2. Fight it, in which case it cost you time, money, and resources.
3. Ignore it, in which case you risk raising the taxman's ire, which can be a nightmare even if you end up in the right (for this specific situation), it'll also choosing 1 or 2 above.