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Right you wouldn't expect airline miles hotel points cash back offers to be taxable.
But if -- signed up for new checking or savings account recently the IRS can come knocking at your door joining me now frank Kelly.
Travel expert and founder of the point -- dot com.
Brian welcome to the show the look I want to show before we get started the tax form.
That your bank could send you.
I think assumes -- -- you've got present take a look at this isn't the 1099 for me couldn't get sent you be required to file that with the IRS reporting income.
What is going on here Brian.
It's pretty crazy as monetary -- and let me just first say this isn't with all banks it's really just Citi at this point.
Taking the overly cautious approach and treating the miles -- -- checking and savings accounts as taxable income.
And in my opinion they're valuing them pretty highly as well.
Well we do this everyday I haven't seen this before and as a consumer I got to tell you.
I don't want to pay for their advertising gimmicks because that's really what it comes down to it's a marketing ploy to get -- into the checking account get me into the savings account now you're telling me that I that I've gotta pay the IRS on.
In come on earned income are you kidding me.
Totally agree and the crazy thing -- -- -- I've opened up technical talents in the past with chase.
Bank direct and I've never gotten a 1090 nights I don't know why Citi out of the blue.
It's doing it and it's a 625.
Dollar tax -- for 25000 measly miles.
And I think it's also important note these are American Airlines miles and we don't know that Americans and bankruptcy so you know.
-- may not even be around for you to use those points -- right.
Right I mean I don't think they're gonna go under and even if they did the frequent flyer program most likely would be purchased by another airline but still the point is.
You don't own the miles these are not your assets so watch I have to pay taxes on.
And let's face it there's so many rules about using the miles that actually getting the ticket is such a pain in the -- that a lot of people never even use those miles.
So -- -- sitting around and be emulating and you never use them but you have to pay a tax on right.
Exactly and depending on your tax bracket I mean you may be paying 200 dollars.
I'm miles that you may only get 200 dollars in value from its pretty ridiculous.
Now what is the IRS saying about this because they are the folks in charge of the rules and I've never seen them coming out saying.
Hi at a chart is that consumers.
Right frequent flier miles are such a murky subject because.
You know one person may redeem for first class ticket some person you know the next person may let them expire so how are you gonna chart you know tax them.
As an asset so the IRS has never really pursued this so it's kind of annoying that -- is.
Cities kind of raising mistakes on this one you know when they were pushed for comment they said yeah you know they can be taxable.
They didn't say it's an area of priority for them.
-- personally don't think they're gonna come after people for miles because it's an administrative nightmare.
You know if you've got the 1099 need to decide what to do it that.
-- bring would you go as far as not filing or are you gonna get in trouble then because clearly cities telling me IRS what they're doing.
Right I mean I'm not a licensed tax professional so you -- you no matter what you do you should you should work with someone who's professional.
I would personally I would at least dispute the value.
I would -- you know document you know 25000 miles are used them for a trip that was only a 150 dollars to me that's the value so you could.
You know mark down the value or.
You know some people aren't gonna file it and I think -- virus ever does come after you just have a Paper trail and so this is why I didn't file them I don't own these miles or I didn't even use.
So -- -- -- gonna prove that you use those miles.
Well that's great take away I think our -- I think that do you really need to get -- reporting come that you really.
Having used not something sitting on -- shelf somewhere that you never did use.
Or picking on studio lot here we'd love to have city on talk about this explained to us what they're doing.
But American Express may be doing this is well tell me what's going on there.
-- American Express ran a couple promotions -- -- that were pretty lucrative if you were card holder you know different point bonuses and if you actually got over 600 dollars in value they also are sending 1099 it's the crazy thing is -- some of those things that people one workshop finder.
Memberships for these kind of useless -- lines things that they didn't even use but yet now they're gonna have to pay taxes on a crazy value.
So it's a little bit different because it's not just written flier miles but I would just -- where you're you know signing up for promotion and check the fine print and make sure that you're not gonna get tax.
And that we say of -- people work if you ever get a credit card -- checking account.
You know high back to got a card from Amex at the end of the year with lots of that -- And I never saw anything that -- I might be taxed on it I didn't there was no heads up about their for consumers.
I do you think.
That these these companies look 11 bank does this they're all gonna do it -- you know what I mean.
And that -- are they gonna have to disclose this will there be some kind of disclosure that people can really get their arms around.
I hope so I mean I think the public outcry.
With this round of about 1099.
I think it definitely -- thinking that you know consumers are savvy these days you know just like when Bank of America came out there ATM fees in the opera that result I remember well back.
So I think as long as people you -- let if you're if you get a 1099 -- -- not happy with that you know we live in a capitalistic society let your bank know.
Say this is an okay this is you know or disagree with them.
And I think you know the more respect they get is the better and -- and if they're gonna attack she wants that they should at least let you know ahead of time so it's not a surprise -- the.
I couldn't agree with you more and we are experts here complaining and getting results O'Brien well -- -- -- advice.
Thank you so much great to see you and -- come back soon -- know what happens with us this surely there's going to be more stories on it thank you.
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