Citibank jolts frequent-fliers, says miles are taxable
Have any of you recently received a 1099 from Citibank for reportable income due to your American frequent flier miles earned by opening a Citibank account?
Some American Airlines frequent-fliers got a jolt this week after Citibank sent tax forms that listed miles as taxable miscellaneous income.
The Associated Press reports the 1099 tax forms "were sent to customers who were given American Airline miles for opening a checking or savings account last year. That's causing confusion — and possible concern — among those who never before reported their frequent flier miles and other credit card rewards as income."
The Los Angeles Times writes the AA customers who received the 1099 tax forms from Citibank now could be "on the hook for paying related taxes or possibly facing a greater risk of being audited."
And, for those keeping track at home, Citibank valued the AA miles at about 2.5 cents a mile -- or roughly the equivalent of $625 for the 25,000 miles needed for a round-trip domestic award ticket.
Ouch!!! So far we have not yet received a 1099 Form from Citibank, but we are AA Citibank customers and have been collecting miles via their AAdvantage Credit Cards. Looks like Citibank is closing their lucrative loop hole to collect miles via their AA Credit cards.... If this is the case, I am sure, other banks, like Chase/United Airlines will soon follow suite.....