There seems to be some confusion among those who have never before reported their frequent flier miles as income. What is all the confusion about? Citibank recently sent their customers, who were given American Airline miles for opening a checking or savings account last year, 1099 tax forms to report their frequent flier miles.Yesterday, the Associated Press reported that:
Credit card rewards — including frequent flier miles and cash back — are not taxable because they are treated as rebates on spending, according to the Tax Institute at H&R Block.
However, a reward given for opening a checking or savings account is not considered a rebate since you don’t spend any money to receive it. So the gift is instead treated similarly to interest income, meaning that it’s taxable.
So, if you go on a press trip which you did not spend anything to receive, how should the trip be treated when it comes to taxes? Should you come up with an approximate value for that trip and declare it as income? Should the trip provider come up with the value and issue a 1099-MISC form? If you are issued a 1099-MISC form, do you have to tell the IRS you received it?
Ultimately, when it come to press or promotional trips, I am not aware of a single company that has ever sent out a 1099 form telling an individual and the IRS that they gave away trips valued at or above $600 as income in the form of an award, prize or “other income payments.”