Posted by Chuck on February 15, 2018
Bank Account Bonuses

Published on February 15th, 2018 | by Chuck

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Did you get a 1099-INT from Wells Fargo? and More 1099 Anomalies

A lot of us did the $250 Wells Fargo personal checking bonus during 2017 since it was easy and a nice bonus. Oddly, some people are getting a Form 1099-INT from Wells for the bonus while others have not. Repeated customer service and supervisor requests all yield the same reply: your account is a non-interest bearing account and is not subject to a 1099, even on the signup bonus.

While most banks report bonuses on Form 1099-INT, some banks consider interest to be miscellaneous income and subject to the minimum $600 reporting threshold of 1099-Misc.

I can not wrap my head around the fact that they sent it to some people and not others. Maybe someone else will figure it out.

If you were issued a 1099 it probably came in the mail. You can also find it in your online login: Accounts > View Statements & Documents.

On a related note, a commenter on the TD Bank bonus notes not getting a 1099, again because they consider bank bonuses to be Misc income subject to the $600 reporting threshold.

I’m not a tax expert, but presumably the bank’s decision to count it as Misc doesn’t exempt it from tax liability. These bonuses could probably be self-reported as interest income or some sort miscellaneous income.

There’s also an interesting comment regarding interest earnings which one bank claimed is not subject to 1099-INT since it has qualifications to earn. That’s an interesting theory, but seems like an outlier.

Some of you may have opened a Schwab brokerage recently and gotten the $100 bonus. My understanding is that brokerages don’t typically send out 1099s, probably since it’s not considered interest income, rather Misc. income which is subject to a $600 threshold.

A brokerage bonus of $600+ would probably get a 1099-Misc. Or perhaps brokerage bonuses are meant to offset fees of switching over (I was once told such a thing by a brokerage advisor), and then there’s no tax liability on that? Have to ask a tax advisor really.



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Dan
Dan

I haven’t received mine yet. Not sure if I should keep waiting.

Don
Don

I haven’t received one from USBank either. Checked online just to be sure and no 1099.

random shots
random shots

Spouse and I did for the US Bank checking bonus.

Mike M.
Mike M.

I also got one from US Bank. Didn’t get one from Wesbanco (was only $50 bonus) or from 5/3 Bank, Andigo, or PNC.

Kimillionaire
Kimillionaire

I haven’t received my US Bank 1099 by mail or online either.

Freddy
Freddy

I received mine by mail.

Jeff
Jeff

I also did not receive any 1099 for this bonus.

Bob Newbie
Bob Newbie

Did you qualify with debit card transactions or a direct deposit?

C
C

Perhaps too early, but I did not receive a 1099-INT from Wells Fargo.

I did, however, receive one from First Merchants for a sign up bonus of $200.

Daniel
Daniel

Glad to know I’m not the only one waiting for Wells Fargo to send a 1099

todd
todd

haha i received all of my 1099-int’s except for the wells fargo personal and td bank bonus. that explains it, guess it wont be reported then.

Alex
Alex

I got 1099-INT from TD bonus last year

todd
todd

was this for the $300 personal checking bonus?

Drew
Drew

I happened to call TD a few hours before this post, asking about a $300 checking bonus. They told me your account is a non-interest bearing account and is not subject to a 1099, even on the signup bonus. I wonder whether it’s 1099-MISC income. :-/

Drew
Drew

Aha, the TD bonus page actually explicitly says that it’s 1099-MISC income “Bonus will be reported as taxable income to the IRS on a 1099-MISC.”

K
K

My wife and I signed up in the same branch on the same day, with the same banker. I got a 1099 and she did not.

Darv
Darv

Schwab did not include $100 bonus for wife but did send a 1099 for interest of less than 50 cents for her.

Associated Bank does not send 1099s unless $600 or over (MISC).

PNC does not send 1099s (MISC).

TCF does not send 1099s.

Either myself or SO did these bonuses past years.

My CPA tax accountant said not to bother reporting anything for which I didn’t get a 1099.

All other checking bonuses we’ve done have produced either 1099-INTs or 1099-MISCs. As you said, 1099-MISCs are optional if under $600 but I’ve seen them for under $600. 1099-INTs are optional if less than $10 but as I said with Schwab, I’ve seen them for as little as 10 cents.

Blue
Blue

My Schwab 1099 was for 1 penny.

Lrdx
Lrdx

Good thing it’s going to round off to $0 in the first cell, unless you want to file on paper.

Shawn
Shawn

You have to report all income. Your CPAs advice is bluntly wrong. Find a new CPA.

MoreSun
MoreSun

Oh my gosh- I second this!!

Darv
Darv

Hi Shawn. My CPA works for a reputable firm in a major US city. He’s been doing personal tax returns for 30+ years. I follow his advice.

ranova
ranova

you should report it.

I reported my TD Bank bonus even though I didnt receive a 1099int. Additionally, I reported my Netspend interest from BOFI since they still havent sent me 1099s, yet Metabank has.

Darv
Darv

How do you know it’s income?

If Wells Fargo says it’s not income because debit card transactions are required therefore it falls under rebates, then are you more qualified to determine the status?

Go ahead and report it if you feel better. Are you reporting it on moral grounds or because you’re afraid of getting audited?

This is a community of users built on circumventing every imaginable rule to get money out of banks but here we are squabbling over whether $200 should be reported when the IRS has no idea if you got a payment and no opinion on whether it’s income.

null
null

If you qualified by making debit card transactions, treating the payment, up to the total of the qualifying debit card transactions, as a rebate would seem like a reasonable position. If the bonus exceeds the total amount of the qualifying debit card transactions, I would suspect the excess amount is taxable.

There is a difference between taking a reasonable, but uncertain, tax position, versus a blatantly incorrect and unlawful position (knowingly not reporting taxable income on the basis that it wasn’t 1099’d).

Dan
Dan

rebate can be more than spend. think about credit cards that offer $50 bonus on first purchase. buy a $1 pack of gum, make $49 profit. Do you report $49?

Bob Newbie
Bob Newbie

Non-business credit card rebates are non-taxable, so that’s irrelevant.
Although if a bank account requires debit card transactions to qualify for the promotion, then there is probably an argument there.

Wong
Wong

This is the generally established rule for treating rebates. Even if the value of the rebate exceeds the cost of triggering the rebate, it is still non-taxable. Nowhere does the IRS require you to report a cost basis of any sort when calculating the taxability of it. In fact, they just mention in the IRS ruling that cashback/airline miles/etc are considered rebates on purchases and therefore are not taxable. There doesn’t appear to be any case laws contradicting it. I find it extremely dishonest how some people are trying to go against an established IRS ruling to guilt trip others into paying unnecessary taxes.

Shawn
Shawn

This statement in factually wrong.

Please cite what IRS ruling. The IRS issued an announcement (2002-18) stating that due to administrative issues they are not pursuing this on enforcement. They specifically mention the announcement does not cover benefits converted to cash or promotional offers.

There is case law see Shankar v. Commissioner. This was decides in Tax Court. Facts are that when Citi providing travel points for opening a deposit relationship this was income under IRC 61.

This might be an IRS enforcement position, it is not a technical IRS position. However, even in their enforcement position they make it clear the announcement does not apply when converted to cash. Therefore the WF facts are not in line.

It is not dishonest to fully report your income. I support paying the least amount of taxes possible within the confines of the law (tax avoidance). Tax evasion (under reporting income) is illegal and should not be supported.

Darv
Darv

Hi Shawn. I thought I would update here as I met with my tax accountant. He said that if any portion of the exercise requires a purchase that the entire amount is not income, falls under the rebate “provision” (or whatever he called it). I said I would sleep better if I reported the checking bonuses. But anyhow, for PNC and Wells Fargo, in those cases I would have an argument that they are rebates because of the debit card purchase requirements.

This helps reconcile why Wells Fargo did not 1099 one of my bonuses because one of them required debit card purchases and the same for PNC.

I’ll think about it for next year to decide if I will claim similar bonuses earned this year.

Darv
Darv

For the record, I came here to provide data points on 1099s that are generally abnormal. I posted this information for people to do with it what they will, without judgement.

I pointed out examples of how reasonable people would not report income on tax returns as context.

At the end of the day I’m paying pretty good money for a seasoned tax professional to help me prepare my return. I need this help to do some complicated business situations. So if he tells me not to worry about reporting apparently immaterial amounts that are not 1999ed, I’m not going to do it and sleep fine.

Good day, all.

Olga
Olga

There are people around who get paid from the taxes we all pay so it natural for them to agitate you into paying as much taxes as possible.

Shawn
Shawn

No more like the amount legally required under Federal law. Everyone should pay the least amount of taxes as possible under the law. I personally do this and think everyone should. My issue is when people start committing tax evasion and not tax avoidance.

Shawn
Shawn

It definitely thinks it is income. Rebate on purchase was established through a Rev Ruls and PLRs. If you met requirement with minimum amounts of spending I don’t see the IRS viewing your facts nicely. 200 rebate on 5 in spend. Don’t think so.

null
null

His advice is wrong. Internal Revenue Code section 61 defines “gross income” to include “all income from whatever source derived,” “except as otherwise provided in this subtitle.” There is no exception for income that wasn’t reported on a 1099.

I’m sure you can get away with not reporting it correctly, but that is not legal and not something I recommend doing. (I realize that I’m in the minority on this issue — I report everything regardless of value and even my earnings from MS.)

Darv
Darv

Yep, we all do what we think is right. My tax accountant feels the amounts are immaterial. I likely won’t report anything that hasn’t been 1099ed, but I’ll ask him again this year.

It’s kind of like taking a $5000 loan or gift from your parents 120 days before closing on a house. Most people don’t report that to underwriting.

It’s kind of like churners saying they will keep credit cards open for a year or more until they learn that if they close they can churn it–even faster and more often. Remember, these card bonuses are intended to entice years long loyalty.

Or it’s kind of like churners sending ACH transfers P2P or from their brokerage accounts with the intent of appearing as payroll deposits to meet bonus requirements.

You see, there is a fair amount of hypocrisy to go around. I could go on.

Arguing with Strangers on the Web
Arguing with Strangers on the Web

Only, it’s not like any of the card related things which are about the intent. It’s actually a legal obligation.

Can you get away with it? Probably. Is it legal? No. Is doing 80mph in a 75 zone going to get you a ticket? Probably not. Could it? Sure.

Not saying I’d judge you for not reporting it, but Shawn and Null are both correct.

Shawn
Shawn

5,000 gift from parents should be reported to underwriting.

If banks want to entice different behavior change terms or systems.

Bob Newbie
Bob Newbie

Except none of the things you mentioned above are illegal… not reporting your income is illegal.

Darv
Darv

Okay Bob.

Here’s another one.

You and a group of friends play poker every month. At the end of the year you’re up $25. One of your friends is down $25. He can’t report the loss but you’re supposed to claim that $25. Will you?

Shawn
Shawn

Yes I will. He can deduct the loss to the extent of gambling winnings. This is very straightforward in the law. Under reporting income is illegal.

Plus just a hassle to amend if the 1099 finally shows up (because the IRS old computer will eventually match it and you will get a notice). You avoid the illegal and hassle when following IRC 61 and report all gross income.

Bob Newbie
Bob Newbie

No I wouldn’t because there would be no paper trail.
Bank bonuses in any form on the other hand.. they can definitely dig that up.

Shawn
Shawn

So you would break Federal law and not report income? Good luck with that. Report all income means staying out of trouble.

Darv
Darv

Hi Shawn,

I will report all my income to my tax advisor like I do every year when I meet with him. I’ll do whatever he says. I’m not the expert.

You could express your tax opinion here and leave the judgment out of it.

I’m not interested in any issues with the law which is one of the main reasons I hire a tax accountant.

I appreciate yours and others’ opinions on the tax interpretations. I’m aware that the $20 payment from the neighbor for mowing his lawn while he’s on vacation is technically supposed to be reported and I’m also aware that my friend who won $25 playing poker in 2017 is technically supposed to report that as income. Life is not black and white even though sometimes it’s easier to try that.

Have a nice day.

Shawn
Shawn

I support consulting with a qualified professional.

No judgement. Just stating a position.

Hiring an accountant does not mean you ca’t be audited.

These matters are black and white. Some people just cheat the system out of tax revenue by not fully reporting their income. Other areas are less clear, but the concept of what is income is very clear under Section 61.

You too. I would just advice that you consult with a qualified professional and make sure to have their opinions in writing.

Darv
Darv

Okay. I definitely don’t want to get audited, only because of the maze of transactions I would have to explain for all these transfers, so if only for that reason I’ll tell him I want the lowest risk possible for audit. I imagine he’ll agree to putting these other ones on there.

What do you think of deducting property tax prepayments done Dec 2017 for 2018? In Minnesota we are assessed in December 2017 for 2018 taxes but we don’t have a bill, although we do have a proposed statement. Tax accountant said to prepay and deduct.

Shawn
Shawn

Is it assessed/lien attach? Was physical cash paid? If so probably good. Key is assessment date. If the amount is assessed likely good. Once again consult a CPA that practices this. I don’t practice this area.

Darv
Darv

He said they checked and the assessment date in Minnesota is by law no later than 12/28/17 for 2018 property taxes. I don’t know about a lien. By they I mean his tax firm.

Physical cash was not exchanged. I paid mine with two different credit cards–split the payments. Does this matter–paying with a credit card? I got emails from the county stating they were “payment confirmations” and these emails were sent immediately after the payments last week of December.

Shawn
Shawn

Credit card does not matter just actually has to be paid.

This sounds fine.

Bob Newbie
Bob Newbie

99.9% chance they’re not going to find out I won $25 gambling with some friends.

Shawn
Shawn

So you are playing audit lottery? How about just reporting all income because that is the law. Just because you don’t get caught doesn’t make it legal.

Dith
Dith

Yes, lying on your taxes is exactly like getting a loan and lying about it to underwriting; it is called fraud and is a crime.

These lies cost innocent victims tens of thousands of dollars because the bank can’t accurate assess risk. They have to raise the interest rates on everyone to cover for the liars who unsurprisingly have a greater tendency to default. It turns out the ability to save up a down payment is a great indicator for how good a person will be at paying a mortgage.

Messing with banks and credit cards for signup bonuses? I’m sure the banks would love for that to be crime, but it isn’t. Why would you even equate these things?

And yes, I did pay taxes on churning income that wasn’t 1099ed.

Wayne
Wayne

Lying on your taxes is like churning credit card bonuses? The human brain’s ability to justify one’s own actions is limitless.

artgriego
artgriego

MS!? Why on earth would you report that? Cashback from credit cards is explicitly exempted from taxable income.

Shawn
Shawn

Ask them if it is income under IRC 61, if not let me know what he cites. No concept of materiality for tax filings. You should report to the absolute best of knowledge.

Darv
Darv

If you mow your neighbor’s lawn and he hands you a 20, would you report that?

Shawn
Shawn

I would see IRC Sec 61. Unless specifically excluded all income is taxable/reportable. No authoritative literature I can find and I would argue no non-non-frivolous filing position supports this income being non-taxable.

Wayne
Wayne

*Would* you or *should* you are two different questions.

artgriego
artgriego

Strange…I received no 1099 from Schwab for a $50 customer service gesture and the couch change in actual account interest (more than $0.50 though)

Darv
Darv

I received a 1099 from Wells Fargo but it was missing one checking bonus I did. I did three in 2017 but it only had two listed. My wife’s was correct from Wells Fargo. Given some people haven’t received 1099s at all, not surprised mine is incorrect.

Steven L
Steven L

I’ve been told that any bank account bonus above $10 should trigger a 1099 form. I do not know how consistent that is though. The reasoning behind why bank account bonuses are taxable and not credit card bonuses is because you are required to spend money to get the credit card bonus where-as the bank account bonuses you do not.

Bob Newbie
Bob Newbie

Yes, but in the situation with Wells Fargo you could either qualify with debit card purchases or direct deposit.
So a spending requirement was there depending on what path you chose.

nonimmigranth1b
nonimmigranth1b

No 1099 for me and wife yet.

Arley
Arley

If you haven’t received on by now I would just do the taxes. By law, they have till Jan 31 to issue 1099s. It’s Feb 15.

Chris

I received mine in the middle of January.

Kapil
Kapil

Even I have not received anything from wells fargo though received from all other banks.
Schwab sent 1099-INT for 1 cent but they did not include the $100 bonus in that.
With wells fargo I even tried to login but it fails every time stating system is not available may be they removed once account is closed.

SVP
SVP

Same at my end as well , I tried calling Wells Fargo /TD customer service , I was told they will not send out 1099 INT for bonuses and banks will not report it to IRS

Jay Mathuria
Jay Mathuria

i didnt receive one from wells fargo but i reports the income in my tax filing :(. I should have waited.

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