Sure. Why not? It would be consistent with the bankruptcy code, valuables left to loved ones in a will, and has to be included in a list of documents when filing for divorce. Things that have value should be taxed, right?
Items should be reported on your income tax returns:
• Capital Gains
• Real Estate
• Debt forgiveness
• Lottery winnings
• Gifts (over $13,000)
and now Frequent Flyer Miles?
Are you serious?
Citibank sent customers 1099 forms for their customers who received American Airline miles when opening a checking account in 2011. Somebody up there thought they were complying with IRS regulations. Maybe they know something we don’t know.
The good news is reward points and frequent flyer miles awarded in the use of a membership account (or stupid credit card) are considered a rebate. However, a “reward” given for opening a checking or savings account is considered a gift and could be taxable. So you could get a big kickback from using your Speedy Rewards card at Speedway gas stations and not owe a dime in taxes.
Besides, how valuable are they anyway?
The IRS does require a 1099 be issued for the above mentioned items when valued at more than $600. Have you tried to cash in your points for a vacation or flight that you wanted? Could it be that this difficulty in using reward points make them more valuable, thus the need for a 1099? I think not, and I certainly don’t want Panara Bread sending me a 1099 for the free sandwiches I “earned” by frequenting their fine establishment!
What if we got taxed on our Starbucks Stars?
If reward points did have to be reported on your 1040 then the value of Priority Club, United, and even the free soy milk we get for using our Starbucks cards could become less valuable because of taxes. There would be rioting in the streets and a new President elected into office.
We spend a lot of time and effort going to “our places” and using “our cards” to earn points. Sometime we even spend more money just for the points. C’mon, you know you do it too. It feels so good to get that Amazon gift card in the mail when you reached the “award limit” that all the extra stuff you bought almost made sense.
Funny how rewards can motivate people even more than paying attention, not interest.