Tuesday, February 19, 2008

I Got a 1099 for a Signup Bonus

Last year, I opened an interest-free checking account at Bank of America. To be honest, I only opened this "MyAccess Checking" account because they offered me a $75 bonus for signing up. The most ironic thing about this "checking" account was that although they include an ATM card and free online bill payments, they didn't actually include a checkbook with the account.

Getting to the point, I was recently surprised to receive a 1099-INT form from Bank of America. When I opened it up, I saw that the bank had listed my $75 "reward/gift" on line 1 as interest earned. That means that I need to pay tax on my signup bonus. Is this common? I've participated in similar offers in the past, but this is the first time that I've seen a 1099 list a bonus as being taxable. So, I dug up a copy of the original offer, and this is what the fine print said:

We (Bank of America) may report the value of any premium to the IRS.


So, I guess that I was forewarned. A side note is that Bank of America allowed me to fund the account using a credit card. There was no cash advance fee. If you use a miles or points card to open a new account, you would earn points as if your initial deposit was a purchase.

What are other people's experiences with bank bonuses?

DC

4 comments:

Chuck said...

Yes, that is common. HSBC also did this to me, and ING Direct will report any money they give you for referrals on your 1099 as well.

Moneymonk said...

Way to go! I never heard of an 1099 bonus until today

Empress Bee (of the High Sea) said...

we closed our boa accounts when they started to open accounts for illegal immigrants with no social security numbers. their practices leave me COLD! (sorry, can you tell i am unhappy with them? ha ha ha)

smiles, bee

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