Weigh All Factors For Bank Account Sign-Up Bonuses
Published Wednesday, February 1, 2017 at: 7:00 AM EST
Have you seen the ads promising a cash reward for opening a new bank account? You may be offered a bonus of $100 or more just for signing up. But be aware that strings are attached.
For starters, promotional giveaways, awards, and prizes are subject to federal and possibly state and local income tax. This applies to everything from bank deposit offers to lottery winnings to cash prizes that accompany Oscar and Grammy awards. (Recent legislation exempts Olympic medal winners from tax.) You'll receive a Form 1099-MISC and must report the income on your tax return.
Consider these other potential drawbacks:
- You may be charged fees relating to the account. For example, if your balance dips below a minimum amount you might be assessed a monthly fee that eventually could wipe out your one-time bonus.
- Some banks require direct deposit enrollment before you receive the bonus. If you don't comply within a specified time, you might not receive the bonus at all.
- The bonus may be rescinded if the account isn't kept open for a specified period of time.
Bottom line: Sign up for an offer only if it otherwise makes sense for you.
© 2021 Advisor Products Inc. All Rights Reserved.
- Teach Employees About Computer Scams
- Sidestepping A Life Insurance Trap
- This Plan Is Just For Nonprofits
- The Best Places In The Country To Retire
- Using RMDs To Buy Life Insurance
- Convert To A Roth IRA Now To Avoid Higher Taxes Later?
- Federal Estate Tax Reduced, But What About State Taxes?
- Tax Rules For Collectible Donations
- 5 'Other' Retirement Saving Ideas
- New Opportunity For Stand-Alone HRAs
- Online Survey Shows Split In Funding Home Down Payment
- IRS Applies IRA Rollover Limit To Coverdell ESAs
- Swap Munis To Your Tax Advantage
- This Type Of Trust Is A Failure
- What Are The Main Items On Trump's Tax Reform Agenda?