Answer:
It depends on whether the freebie, gift, etc., is considered interest or not under IRS regulations (which don't follow the same definitions of interest found in Regulations Q or DD. If the gift, freebie, etc., is given by the bank as an incentive for the customer to open or add to an account, you should consider it interest and report it on Form 1099-INT, along with any conventional interest reported on the account (or accounts, if you bundle them into a single 1099-INT, with a trigger amount of $10 for reporting.
If the payment, gift, premium, etc., is given for other purposes, such as a sweepstakes prize or as an incentive for direct deposit sign-up or debit card use, do not report it on a Form 1099-INT. Instead, if a trigger amount (in the aggregate for one recipient) reaches $600, report it on Form 1099-MISC, under the rules applicable to such reports.
First published on BankersOnline.com 6/14/10
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