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bubbysdad
bubbysdad

Apologize if this has already been suggested, but if bank account bonuses count as taxable income, they might be an excellent way to fund a traditional IRA. The tax deferral would allow you to kick the tax hit down the road, and allow you to fund your retirement on somebody else’s dime…

mark
mark

Doesn’t it have to be W-2 income to fund an IRA? These bonuses would be 1099 income.

Luci
Luci

I’ve gotten the Citi bank bonus and boy do they ever make you pay! I asked about the 1099-INT, right after they told me no we don’t send – yep, got one that had to be added to my taxable income. You will also notice most of these bonuses state payment will be received ‘…up to 90 days after requirements are met…and your accounts must be open.’ Citi will not pay until at least 90 days have passed and requirements met and you’ve complained non-stop to their executive office. As I said, Citi really gets their pound of flesh out of you for the bonus. Be ready.

Brach
Brach

I’ve got news for you. Whether or not the bank reports the bonus, YOU are still required to report it on your income tax return!

Also, even though banks are not required to report interest under $10, YOU are still required to include ALL taxable interest in your gross income, whether or not it was reported on a 1099!

As for your claim that “Citi won’t pay until …,” Citi paid my $500 bonus on 1/16/2020, just 47 days after I met the requirements!

Citi also paid me a $500 bonus on 3/13/2019, just 67 days after I met the requirements for that bonus. Citi sent me 1099-INT this month that includes that $500 bonus.

So I have to wonder what’s your problem.

HarryTheFirstHarry
HarryTheFirstHarry

One other question that commonly gets asked is in relation to this is: Why? Why would so many different banks give out money so easily?

While there is no written answer available for that anywhere, we all guess that it is to drum up the numbers and please the share holders that rules are lax and those that exist are also not enforced most times.

whodidntante
whodidntante

I think banks know what they’re doing. Some percentage will convert to profitable customer relationships. You don’t have to make money on every account to make money overall.

Zalmy

Hey, Will. I as well have made a bunch of money off of bank account bonuses for the last couple of years. There is one point you’ve never addressed (to my knowledge, and I read pretty much everything here) on the site- the fact that if you’d otherwise be eligible for an Earned Income Credit, you MUST stay under $3,450 or you’ll lose it, and the EIC can be quite substantial. Because a lot of readers of this site are lower income who otherwise may not be getting unearned income, they may not think about this, and it can dramatically affect people’s decision making when it comes to bonuses. If anyone thinks that $3,450 is ludicrous, you haven’t been in the game long enough

LaHossBoss
LaHossBoss

Now this is interesting. Say my husband (only in speaking, not on paper, it’s just not our thing and decades happy so no lashings, please) is a “homemaker”. He files no taxes because he has no actual income. If he did these various bonuses up to no higher than the 3xxx amount limit set by the irs, he would then in turn hypothetically qualify for a tax refund via the EIC (of course this is just absolutely straight forward hypothetical, not accounting any other variables)? Meaning he earned income for that year, albeit via “investment income” (1099). I know, I know. No tax advice. I am just looking for some casual conversation, but rather toying with an imaginary scenario, and maybe would consider speaking to a tax consultant further if it seems worth the time if this could be a thing. If this truly is inappropriate, feel free to remove. Thanks!

Zalmy

The money earned through bank account bonuses are generally reported on a 1099-INT, which is unearned income. Not only does that not help qualify you towards the minimum earned income level required to be ELIGIBLE for the EIC, it in fact will cause you to be INELIGIBLE for it if you earn more than (3,600 in 2019) in unearned income.

Zalmy

Glad to be of service 🙂

SamL
SamL

Anyone doing EITC needs to watch this like a hawk. If you go $1 over the “investment income” (cap gains, interest dividends) limit for that tax year then you are disqualified from EITC.

FWIW anything on 1099-MISC does not count against you.

Brach
Brach

Form 1099-MISC can also be used to report compensation paid to a person who is not an employee of the payor. The person receiving non-employee compensation reported on a 1099-MISC is responsible for paying the associated payroll taxes that a self-employed person is required to pay.

TJ
TJ

Sometimes brokerage bonuses show up on a 1099-Misc. These obviously aren’t subject to self employment tax.

Zalmy

Correct, you need to be super careful about this. This part of our tax law is very much regressive. You can lose many thousands of dollars for one foolish bank account bonus.

About 1099-MISCs, there’s truth to this but that’s not a hard rule, there are multiple 1099-MISC forms and some (such as rents) can count against you.

One thing to note is you can use passive losses to offset gains, so if you accidentally went over the limit there are definitely ways to correct it, but you need to take care of it that year. Consult a CPA.

Disclaimer: Don’t consider this tax or legal advice. Always consult a CPA or attorney.

Brach
Brach

EIC is Earned Income Credit. “Earned income” means income from employment activities. Interest, dividends, investment income and bank bonuses are obviously not income from employment activities.

Dan
Dan

I would like to say that the old Fidelity brokerage bonuses for airline miles also didn’t 1099 me either. This is the same as the Citi checking point bonuses.

I unfortunately haven’t been targeted for points yet. I have a Citi AA business card, but not personal.

Jake
Jake

How long does money need to be away from my established chase checking account in order for chase to consider it “new money” when I open a new savings account and fund it partially with money I had previously taken out of the chase checking?

John Collins
John Collins

Will an ACH transfer from a business LLC checking account to the new personal checking account satisfy the payroll deposit requirement?

I am asking if something unique to a payroll ACH identifies it, or is it just a standard ACH transfer from a business account with a business name?

Robert
Robert

I’m going to show my newbie colors here, but how do you actually do an ach transfer?

JuicyJosh
JuicyJosh

So easy you wouldn’t even believe. Basically its a paperless check. You existing bank account probably already has this capability. Set up an external transfer account. Usually you will be asked to verify the account you are linking with your login credentials or to verify two small deposits made to the linking account. All that said, I would recommend you open a hub account (not your everyday bank account) to initiate transfers to/from. Ally is great. Alliant is another one that works a lot. Here is DoCs post with more info. https://www.doctorofcredit.com/hub-accounts-ach-transfers-capabilities-fees-limits-across-financial-institutions/

Get ready for some easy cash. Start with one or two. Once you get the hang of it – GO CRAZY! I did 2 in first 4 months and then 18+ more in the next 6 months (myself and spouse).

Gadget - Bank Bonus Geek

Man, where is this guy that used to answer questions?

Cy
Cy

How many of these bonuses are churnable? Is there any way to find out

kj
kj

Most bonus terms state when the last time you could have had an account with them and still be considered “new customer.” It really varies from bank to bank but I’ve seen most of these fall between 5 months and 3 years. I know this is an old thread, but I’m more so answering in case people come across this question later through google search. (My mantra… Google isn’t a source, we are a source, google is a catalog.)

Teresa
Teresa

Thank you

Elaine
Elaine

I am leary of opening too many accounts since I know little about ChexSystems and the implications of many new bank account openings. I have two questions:

1) Does opening lots of bank accounts count against your ChexSystem rating in any way, the way too many inquiries or too many new credit cards can impact your credit rating?

2) Similarly, can the opening of many new bank accounts impact your Experion, TransUnion or Equifax rating?

If so, how many is too many? Thanks!