You may be seeing a gradual rise in the amount of Bank Deals lately and it’s substantial to understand that as the economy recovers, banks will start offering more lucrative deals as a practice to attract new customers.
Now, considering that bank deals have been around for quite some time with the practice of expanding their membership, it’s easy to say that in the fore-front of this banking war over competition for new customers, you should expect some deals ranging from $50-$150 just for signing up and funding your account. Now, what substantiates these bonus as “free,” is far beyond me because it’s evident that “Uncle Sam” would want his fair share as well.
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Paying Taxes on Bank Bonuses
Bonuses associated with your new bank account will subject you to taxes, whether you’ve opened a checking account or certificate of deposit, it applies to both cash bonuses or even gifts. The most common way you can verify that you will be taxed is simply with the fine-print guidelines which clearly lays out the statement “The value of your gift will be reported on Form 1099-INT.”
Keep in mind that the exact amount that you pay for your taxes isn’t always consistent because a 1099 is fundamentally bank interest which is entirely based on your individual income tax rate. If the 1099 comes in higher than the retail value at the time the prize is given, you can then claim the lesser value. You would need to note the retail value of the item at the time in order to report the lesser value.
Conclusion:
When you’re looking for a checking account with a generous Bank Bonus, I’m sure all of you are aware that your bonus will be “reported on Form 1099-INT” if it didn’t state so already in the fine prints or terms and condition of your bonus offer. Now, being quite honest, there’s not really any viable options out of not being taxed, although some banks has the option to treat it as a payment for their services rather than as interest. Of course, if the amount is higher than average in a $400+ range, you should expect the banking establishment to require a sent 1099-MISC. Be sure to check out our complete list of Bank Deals for all your banking necessities!
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