Why you shouldn’t care if a bank or credit card company will issue a 1099

In the bonus churning world, there’s far too much concern about whether or not a bank or credit card company will report a bonus payment to the Internal Revenue Service (IRS) and issue a 1099.

Though they’re likely in the minority, there are some people who wonder if a 1099 will be issued because they’re legitimately unsure if the bonus is taxable. For those people, a tax advisor can provide guidance.

But, more often than not, the person inquiring is very much aware that the bonus is taxable and they’re just trying to determine if they can avoid reporting the bonus payment on their tax return. In these instances, the truth is that it doesn’t matter if the credit card company or bank issues a 1099. Unless you want hefty IRS fines to dilute your bank bonus earnings or want be locked out of future bank bonus deals because you’re locked up for tax evasion, you should proactively report and pay any applicable taxes on your bank bonus earnings. On the bright side, if you play your cards right, you can leave prison with a nice collection of referrals for future bonuses. 

Of course, there may be an exception if you’re a taxpayer exempt from filing because you meet certain IRS qualifications. But, even then, the bank or credit card company’s decision to inform the IRS about your bonus earnings should never affect your decision to report your bonus on your tax return. 

When it comes to credit card and bank bonuses, it literally pays to do the right thing and report your bonus earnings because you can pay the tax bill with a rewards-earning card.