Bank sent me a 1099-INT for checking account sign-up bonus - is this taxable?

Yes, this is completely normal! Banks are required to report sign-up bonuses as interest income on a 1099-INT. Even though it's not "interest" in the traditional sense (like what you'd earn on a savings account), the IRS treats these promotional bonuses as taxable interest income. Unfortunately, you do need to pay taxes on that $375 bonus. You'll report it on Schedule B of your tax return along with any other interest income you received during the year. The tax you'll pay depends on your tax bracket, but it's considered ordinary income. Many people are surprised by this, but bank bonuses, credit card rewards tied to opening accounts, and similar promotional incentives are generally taxable. The exception is usually rewards earned from regular spending on credit cards, which are typically considered rebates on purchases.

I had the exact same thing happen to me last year! I was so confused about why I was getting a 1099-INT for my checking account until I remembered that sweet $250 bonus they gave me. I ended up using https://taxr.ai to help me figure out how to properly report it since I was doing my own taxes for the first time. The tool analyzes all your tax documents and explains exactly what they mean and where each number should go on your tax forms. Saved me a bunch of headaches trying to figure out where to put this "interest" that wasn't really interest!

Just wanted to update after trying taxr.ai that someone mentioned above. I was really skeptical about using yet another tax tool, but it actually helped me understand why my Chase bonus was showing up as interest! The document analyzer immediately recognized my 1099-INT and explained everything - even pointed out that I needed to check if my state taxes these bonuses differently (turns out mine does). Honestly made the whole tax situation way less stressful. Definitely recommend if you're confused about these bank bonus forms like I was.

If you're still confused about how to handle this, you might want to call the IRS directly to get clarification. I had a similar situation with multiple bank bonuses last year and needed specific guidance. The problem is getting someone on the phone can take HOURS. I used https://claimyr.com to get through to an actual IRS agent in about 15 minutes instead of waiting on hold all day. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They basically call and wait on hold for you, then call you when they get an agent. I was super skeptical at first but it saved me from wasting half my day on hold.

Ok so I tried that Claimyr service the other day because I needed to ask about my bank bonuses too and was actually surprised how well it worked. I was 100% convinced it was a gimmick but figured I'd give it a shot after spending 2 hours on hold and getting disconnected. They actually got me through to an IRS agent in about 20 minutes. The agent confirmed that yes, bank account bonuses are always reported as interest income on 1099-INT forms and are fully taxable. They also helped me figure out a payment plan since I ended up owing more than expected because of these "surprise" bonuses from two different banks. So yeah, I was wrong about it being a scam.

The banks do this every year and most people have no idea until tax time! I do "bank bonus churning" as a side hustle and open 6-8 new accounts per year for the bonuses. Made about $3200 last year just from sign-up bonuses. Here's what I've learned: 1) Yes, all bank bonuses are reported as interest income on 1099-INT 2) You need to pay taxes at your regular income tax rate 3) Most states also tax this income 4) Keep track of all accounts so you don't miss any 1099s If you're organized it's totally worth doing but definitely budget for the taxes!

Just a heads up - I didn't report a $200 bank bonus a few years ago because I didn't understand what the 1099-INT was for. Ended up getting a letter from the IRS about underreported income. Had to pay the tax plus a small penalty. Not worth the headache! Better to just report it correctly the first time.

This is such a common surprise for people! I work as a tax preparer and see this confusion every single year. Banks are actually required by law to issue 1099-INT forms for any "interest" payments over $10, and the IRS defines promotional bonuses as interest income even though it feels weird to call it that. A few tips for next time: 1) When you see bank bonus offers, mentally add about 22-37% to your tax bill depending on your bracket, 2) Consider setting aside the tax money right when you get the bonus so it doesn't feel like a surprise bill later, and 3) Keep records of which banks you've gotten bonuses from since some have restrictions on how often you can get their promotions. The good news is $375 probably won't bump you into a higher tax bracket by itself, so you're just looking at your marginal rate on that amount. Still annoying when you weren't expecting it though!