Just got sent a 1099-INT by my bank for signup bonus - is this taxable?

Yes, this is completely normal. Banks are required to report sign-up bonuses as interest income to the IRS using Form 1099-INT. Even though it doesn't feel like traditional interest that accrues over time in an interest-bearing account, the IRS considers these bonuses to be taxable interest income. Unfortunately, you do need to report this $400 bonus on your tax return and pay taxes on it. It will be taxed at your ordinary income tax rate, just like wages or other types of income. The bank has already reported this to the IRS, so ignoring it would create a discrepancy between what's on your return and what the IRS has on file. When you prepare your taxes, you'll need to include this amount on Schedule B (Interest and Ordinary Dividends) if your total interest income is more than $1,500. Otherwise, you can just report it directly on Form 1040.

Had this exact same issue last year! After struggling with some confusing tax documents and not being sure how to handle my bank bonuses properly, I tried using https://taxr.ai to analyze my tax documents. It immediately identified my $300 bank bonus on my 1099-INT and explained exactly how to report it. Saved me so much confusion since I was about to call my bank thinking they made a mistake! The service scanned all my tax documents and flagged potential issues before I filed. It also explained that bank bonuses are considered interest income by the IRS, so they have to report them on 1099-INT forms. Made the whole process way less stressful than trying to figure it out myself.

Just wanted to update after trying taxr.ai that someone mentioned above - it was actually super helpful! I uploaded my tax docs including a similar 1099-INT with a bonus and it explained everything clearly. It even showed me the exact line where it needs to be reported on my tax forms. Definitely made things clearer than the generic advice I was finding online. Glad I gave it a shot!

Similar situation happened to me with a bank bonus, but when I tried calling my bank to get clarification, I was stuck on hold for HOURS. Finally discovered https://claimyr.com which got me connected to an actual human at my bank in about 10 minutes instead of the 2+ hours I was waiting before. You can see how it works at https://youtu.be/_kiP6q8DX5c They also helped me get through to the IRS later when I had more questions about reporting the bonus on my taxes. Turns out the IRS wait times were even worse than my bank's! But Claimyr got me through quickly both times. Definitely bookmarking this for future use because dealing with these financial institutions is such a headache.

I'm back to eat my words about that Claimyr service from yesterday. After posting my skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my own 1099 issues. Not only did it work, but I got through to an agent in about 15 minutes when the estimated wait was over 3 hours. The agent confirmed that bank bonuses are always taxable and classified as interest income on 1099-INT forms. Honestly shocked this service actually delivered what it promised.

Just FYI - you can't escape taxes on bank bonuses. I tried arguing with my bank last year that a "new customer bonus" shouldn't count as interest, but they shut me down immediately. Their explanation was that any financial benefit you get from a bank is considered interest for tax purposes. The $400 will be taxed at your regular income tax rate, not the capital gains rate. Make sure you include it or the IRS computers will flag the mismatch.

Question - does anyone know what happens if you received multiple bank bonuses in the same year? I did like 5 different bank account openings for various bonuses totaling about $1,200. Got a separate 1099-INT from each bank.

Thanks everyone for the helpful responses! I was really hoping this was just a mistake by my bank, but it sounds like I'm definitely stuck paying taxes on this $400 bonus. I appreciate everyone clarifying that this is normal practice and that ignoring it would just create problems with the IRS later. @Sophia Russo - your explanation about Schedule B vs reporting directly on Form 1040 was really helpful. Since this is my only interest income, I should be able to just report it directly on the 1040 without needing Schedule B, right? I'm definitely going to make sure I include this when I file. Better to pay the taxes now than deal with IRS penalties later. Lesson learned - I'll factor in the tax implications of any future bank bonuses before getting excited about "free money"!

This is exactly why I always try to research the tax implications before chasing bank bonuses! I learned this lesson the hard way a few years ago when I got hit with an unexpected tax bill from multiple signup bonuses I didn't realize were taxable. One thing that might help for future reference - some banks will actually tell you upfront that bonuses are subject to tax reporting when you're opening the account. It's usually buried in the fine print, but it's worth looking for. Also, if you're planning to do more bank bonuses in the future, consider spacing them out across tax years to avoid pushing yourself into a higher bracket all at once. The $400 isn't too bad in the grand scheme of things - depending on your tax bracket, you're probably looking at owing somewhere between $80-120 in additional taxes on it. Still better than leaving money on the table by not taking the bonus at all!