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Citibank Reporting Frequent Flier Mile Awards To IRS As Taxable Income

Tuesday, January 24, 2012 - 12:15 PM
CitiBank is now reporting frequent flier miles awards to the IRS as taxable income. It is issuing 1099 forms on them. This includes awards on bank accounts and apparently on credit cards. 

Citibank deems frequent-flier miles taxable, but does the IRS? - latimes.com
9
me1004me1004343 posts since
Jan 16, 2010
Rep Points: 2,357
1. Tuesday, January 24, 2012 - 4:35 PM
@me1004 thank you for the heads up.  According to past FT threads, Citi does not issue 1099's for credit card bonuses or earnings, only for miles or points awarded in connection with opening a bank account (although there is some question if they issue 1099's for miles received in connection with a mortgage).   I earned miles last year for opening a Citi credit card affiliated with an airline, so will keep a close eye on my 1099's.   
3
pearlbrownpearlbrown1,356 posts since
Nov 2, 2010
Rep Points: 5,955
2. Tuesday, January 24, 2012 - 5:09 PM
So I am now required to pay Federal Income Tax on $625 that I used the 25,000 miles, which I received for opening a credit card account, on which normally is a $400 flight. Makes perfect sense to me in this confusing world of taxation and corporate bean counters we are living under.
3
ShorebreakShorebreak2,368 posts since
Apr 6, 2010
Rep Points: 12,625
3. Tuesday, January 24, 2012 - 6:55 PM
Pearlblossom, thanks for that added. The story was indicating it is not clear whether they will be issuing the 1099 for miles earned on credit cards -- or for other rewards accrued on credit cards. Mind you, as for the prior info that they don't do it, apparently this is something new they are doing now, never before. They are interpreting current federal 1099 rules to require it, although the story indicates the IRS has not specified where it stands on the point. So yes, do follow up and let us know if you get a 1099 for any rewards on your credit card. According to the story, it is not clear whether the IRS will pursue people who do get such a 1099 (and thus, it was reported to the IRS) but disagree and do not report it on their income tax form -- so the risk is up to the filer.
1
me1004me1004343 posts since
Jan 16, 2010
Rep Points: 2,357
4. Tuesday, January 24, 2012 - 8:30 PM
My understanding is that if the miles are used on business purposes then no taxes are due. However, for personal use, taxes are due.
1
ShorebreakShorebreak2,368 posts since
Apr 6, 2010
Rep Points: 12,625
5. Tuesday, January 24, 2012 - 11:13 PM
Well, Citibank isn't reporting them on a 1099 on the basis of how you use them; they are reporting on the basis that you got them. So, if you think, for whatever reason, that you don't owe taxes on them, since the IRS has gotten a 1099 on them, you presumably are going to have to deal with the iRS one way or the other about it. I don't know, but maybe Ciitibank is not reporting them for business accounts, only for personal accounts.
1
me1004me1004343 posts since
Jan 16, 2010
Rep Points: 2,357
6. Wednesday, January 25, 2012 - 7:18 AM
Re: me1004 Tuesday, January 24, 2012 - 11:13 PM

That's how I meant to phrase my post. You clarified it perfectly,  "maybe Ciitibank is not reporting them for business accounts, only for personal accounts". Thanks.
1
ShorebreakShorebreak2,368 posts since
Apr 6, 2010
Rep Points: 12,625
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