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#2170334 - 03/27/18 04:17 PM Gift for opening account
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Page 59 of the IRS 2017 Tax Guide for Individuals has a section titled "Gift for opening account". It states for deposits of less than $5,000.00, gifts or services valued at more than $10 must be reported as interest. For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. The value is determined by the cost to the institution.

Would it make a difference as far a what type of account was opened? Example, interest bearing or non interest bearing account?

What all would need to be included in determining the cost to the institution? Example, the bank gets billed $10.00 for each gift on the invoice but there is a separate charge for shipping, storage....

Would anything need to be disclosed to the customer opening the account if the gift was over $10 and the opening deposit was under $5000 or the gift was over $20 and the opening deposit was over $5000?

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#2170367 - 03/27/18 05:24 PM Re: Gift for opening account Multiple Hats
rlcarey Online
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Since you are required to send a 1099-INT to any customer that earns $10 or more in interest, I'm not sure the basis for your question. If you give a gift worth $12 for opening a non-interest bearing account with a minimum deposit of less than $5,000 - you still owe them a 1099-INT at the end of the year.
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#2170434 - 03/27/18 07:27 PM Re: Gift for opening account rlcarey
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I'd have to agree. That was a dumb question unless there are no dumb questions.

One more question. If the account paid $2.05 in interest during 2017 and they received a gift for opening the account that was worth $10.00. Does that mean that the customer should receive a 1099 for $12.05?

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#2170567 - 03/28/18 02:19 PM Re: Gift for opening account Multiple Hats
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Let me word this a different way. If the non cash gift given at account opening is below the de minimis rule ($10 or under for opening deposit of less than $5000 or $20 or under on for opening deposit of $5000 or more) would any amount (5 cents for example) of interest paid on the account automatically make the gift be included in the 1099 total or would it only have to be included if total interest on the account paid $10 or more in interest?

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#2170571 - 03/28/18 02:43 PM Re: Gift for opening account Multiple Hats
rlcarey Online
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Galveston, TX
You totally ignore it if it is under the de minimis threshold:

Rev. Proc. 2000-30

For administrative convenience, the Service will not require a financial institution that provides a “de minimis premium” to treat it as interest for purposes of information reporting under § 6049.
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#2185285 - 07/13/18 02:32 PM Re: Gift for opening account Multiple Hats
Funky Falcon Offline
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I'm going to piggy back on this thread since my question references the same IRS publication mentioned above.

If the bank waives a fee and absorbs the cost for ordering checks valued at $700 for a new customer, would that be considered a gift and require interest reporting?

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#2185297 - 07/13/18 03:08 PM Re: Gift for opening account Multiple Hats
Adam Witmer Offline
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Ordering checks is valued at $700?
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#2185316 - 07/13/18 04:11 PM Re: Gift for opening account Adam Witmer
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It was a very large commercial customer... and now that I just wrote that I realize my research is going down the wrong path.
Last edited by Funky Falcon; 07/13/18 04:15 PM.
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