Bank of America Sending Out 1099s for Credit Card Bonuses
With tax season underway, you’re probably getting lots of envelopes in the mail with 1099s that remind you of all the bonuses you have earned in 2020. Financial institutions will issue a 1099 when you earn a bank bonus, even if the bonus is in the form of miles or points. A 1099 is also issued for referral bonuses for credit cards.
When you sign up for a credit card, complete the spending requirement, and get a bonus, you shouldn’t be receiving a 1099. However, Bank of America is doing just that, sending a Form 1099-MISC to some cardholders who earned a bonus in 2020. Doctor of Credit that Bank of America sent a 1099 for $650 for the Air France/KLM card. It seems to be from this bonus for 50,000 points and a $150 statement credit. They valued the miles at one cent each, plus the $159 statement credit.
These credit card signup bonuses are never considered taxable, because there’s a spending requirement. That means that the points or statement credit that you receive for making purchases with your credit card, are typically considered a rebate. It is possible that 1099s are being sent out for other Bank fo America credit cards as well.
A company can’t force you to pay taxes on just by sending you a Form 1099. But usually when you receive a 1099, it means that you owe tax on that income. In cases like this, where you think you shouldn’t be receiving a 1099, you have some options. First, it’s important that you don’t ignore it. But, you could enter an adjustment to subtract the amount you think should not be taxable. You also need to attach an explanation along with it, when filing your taxes.
Let me know if you received any unexpected 1099 so far from Bank of America or any other financial institutions.