"Apparently, the banking industry doesn't have enough bad press these days. They're going to new heights to tick off customers… quite literally.
Citibank, part of Citigroup, America's #3 bank holding company, launched a campaign offering frequent flyer miles for opening new accounts. Sounds great, right? Only there was a hitch: Citibank announced that it would issue a form 1099-MISC for those customers who receive frequent flyer miles for opening accounts.
Generally, frequent flyer miles and other promotional credits used as a reward are not considered income and are not taxable.
Citibank, however, has a different – and aggressive – interpretation. Citibank contends frequent flyer miles given as a reward for opening an account are taxable income, as would cash or other rewards, and must be officially reported to the taxing authorities. That's the rationale for issuing a form 1099.
The bank has a similar strategy for cash awards. Here's what the small print says:"
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