Tax (Photo credit: 401K)
Well, the IRS may, anyway -
Some American Airlines frequent-fliers got a jolt this week after Citibank sent tax forms that listed miles as taxable miscellaneous income.
The Associated Press reports the 1099 tax forms "were sent to customers who were given American Airline miles for opening a checking or savings account last year. That's causing confusion — and possible concern — among those who never before reported their frequent flier miles and other credit card rewards as income."
Apparently, this feature kicks in only for folks who obtained the miles as a "reward" for opening a new checking and/or savings account. Since they didn't spend any money in order to obtain the "reward", such miles qualify as income, and therefore taxable.
Now, as Citibank's promotion gave new customers some 25,000 AAir miles, the customers stand to owe tax on around $650 of added "income". They helpfully sent copies of the 1099 forms to the IRS, as well as affected customers.
No word on what Chase is planning to do; their current promotion involves crediting new accounts with some $150.00, which surely must be taxable as well.
"If it moves, tax it. If it doesn't, tax it anyway."
Posted by: ZZMike | February 03, 2012 at 08:18 PM
The Beatles did a nice little song about that....
Posted by: Max | February 03, 2012 at 08:48 PM