With the dawn of a New Year comes the much-anticipated return of tax season, celebrated with glad tidings and the generous mailing of tax forms. The 1099-INT, a common tax form you receive from Hometown Banks each January, reports the amount of interest paid to your deposit accounts in the prior year, assuming you earned more than $10. So since you own an 'Amazing' account that pays interest in rewards points, should you expect to receive a 1099-INT from Hometown Banks each year?
The short answer is yes, since 'Amazing' points are generally treated as taxable income. However, points will only be reported as taxable income in the year they are redeemed. In addition, some 'Amazing' points will never be treated as taxable income, such as points you earn for making debit card purchaes or credits for fees paid. For those that are interested, the following questions determine which points will be reported as taxable income for 2017:
1.) Did you redeem any points in 2017?
2.) If so, were any of those points originally earned as interest or as bonus points?
When the answer to both of these questions is yes, then the value of these points (one point = $0.01) will be included on your Morton Community Bank 1099-INT. You can file this form with your tax return just as you have in the past.
P.S. You aren't required to be an expert in tax law as it relates to rewards programs. Just file your 1099-INT as before and go back to pursuing an 'amazing' life!
-Your 'Amazing' Bankers