Bonus

Posted By: Banker Kathy

Bonus - 01/20/12 03:29 PM

What procedures do you follow when offering a bonus to a customer? For example if they open an account and get a debit card or direct deposit and they get a $25 gift card. I know this fall under the 1099 misc rule.
How do you keep track? Do you do an adjustment at the time the card is given to the customer?

If we make them open an account for a gift card of $25 this would fall under the 1099 int rule.
How do you keep track?
Thanks for any and all feedback!
Posted By: GatorsFan

Re: Bonus - 01/20/12 09:17 PM

You don't need to worry about a 1099 MISC unless you provide a bonus on a non-interest bearing account in excess of $600.00. If you give a bonus on an interest bearing account you would need to give a 1099 INT. To keep track, we have each branch complete a spreadsheet. Grant it there is a possiblility the branch could miss recording the bonus so we would also pull a new account report and verify the customer applied for a debit card or will be receiving direct deposit.
Posted By: Deena

Re: Bonus - 01/23/12 05:32 PM

Quote:
If you give a bonus on an interest bearing account you would need to give a 1099 INT.

I believe this is only true if the bonus meets the IRS definition of interest - meaning it has to be paid for opening, adding to, or maintaining an account. If the bonus is paid for signing up for direct deposit, online banking, debit card, etc., it wouldn't be interest and would be reported on a 1099-MISC if the aggregate amount is $600 or more.
Posted By: rlcarey

Re: Bonus - 01/23/12 06:33 PM

Deena is correct. Interest bearing or non-interest bearing account does not play a factor. It all hinges on if the "bonus" meets the IRS definition of interest.