Last year HSBC offered a popular $350 checking bonus, yesterday a lot of readers reported receiving a 1099-INT form for this bonus. You can view the full letter below:
1099-INT forms are supposed to be sent and post marked by January 31st, 2017 for amounts over $10 ($600 requirement is for 1099-MISC). Regardless of whether you receive any 1099 form, I always recommend treating bank account bonuses as interest and paying taxes on them. What’s interesting is that some readers are receiving this 1099-INT for 2016 even though they received the bonus in 2017.
HSBC are offering to reimburse reasonable costs related to this error. I’m not an accountant or lawyer, so please don’t ask me what reasonable costs are. You can read Chuck’s thoughts on paying taxes for bank account bonuses, credit card rewards here. Please make sure to seek advice from a licensed professional.
Hat tip to /r/churning & reader Phil
I haven’t received the 1099-INT yet but I’m not worried. I’ve actually decided to keep the account as I tend to have a need for foreign currency banking. The signup process was very long but well worth the $350.
THE WORST BANK EVER!!!! Just spent an hour on the phone with them trying to find out how to get reimbursed for having to amend my return. After an hour of our conversation going nowhere, she told me to call back once I have filed my amended return and to make sure I keep the receipt. How do you get reimbursed for the costs???
Lou –
I spent over 30 minutes on the phone with an HSBC rep this evening. The phone call went no where. I wanted to know:
1. What types of costs will be reimbursed – I always send my returns certified mail/return receipt which is not cheap (around $7 each) for 3 returns (fed, state and local). Not sure if TT will let you efile amended returns.
2. How do you submit receipts for reimbursement? How long does reimbursement take?
After answering none of my questions and wasting my time I got the standard “Is there anything else I can do for you this evening?” I wanted to smash my phone against my granite counter top and submit a new phone for reimbursement.
It is mind-boggling how a letter can go out with no instruction on how to get reimbursed.
I called HSBC customer service yesterday and today and was explained the process for reimbursement. They were not clear on the types of expenses that would be reimbursed other than stating “reasonable, supportable costs incurred to file amended returns.” They did tell me the procedure for submitting claims:
1. Email support for your claim to [email protected]. In the subject put “Supplemental 1099-INT Credit”
2. If approved for reimbursement, your claim will be credited to your account. They would not answer how long it would take to receive the credit.
I submitted the cost to mail my federal and state returns certified/return receipt which was a little over $15.
Hopefully this information helps. I will keep you posted as to the status of my claim.
Follow up:
The postage costs to mail my amended tax returns ($~15) was reimbursed to my account the day after I submitted my claim.
A long time ago, I opened an online savings account with them. I got the most obnoxious emails from someone in compliance, who was sure I was worthy of investigation. I answered all the questions and they went away. The VERY DAY when I could close that account and still keep the bonus, I was on the phone. What a bunch of clowns.
Just got HSBC letter with the 2016 1099-INT form.
For once my procrastination paid off. I’m not sure if that’s a good thing.
Can anyone explain how to pay for bank bonuses without the 1099-int (whether lost or didn’t show up). I have a bunch I’d like to cover in Turbo Tax but I don’t have the banks’s Tax IDs…
Any advice?
I used to prepare my taxes for free with TaxAct but it requires the Federal Identification Number also known as Employer Identification Number (EIN) for any 1099-INT issuer. Since three banks did not send me a 1099-INT form ($1,150 total interest), I tried the new Credit Karma Tax free software but it also requires the payer’s EIN. I was able to report all interest using the free online version of Turbo Tax. Turbo Tax does not require the payer’s EIN just the payer name and the interest paid.
I use H&R Block desktop software, and had the option to enter bank interest without 1099/EIN info, which I’ve needed to do a couple times. All programs should have a way to do that buried somewhere, because banks won’t generate a 1099 for less than $10 of interest in a year, but you’re still supposed to report it.
Please find below HSBC info from my 2016 1099-INT form.
HSBC Bank USA, N.A.
2929 Walden Avenue
Depew, New York 14043
Telephone 1-800-975-HSBC
Federal ID No. 20-1177241
In Turbo Tax you don’t need the federal id number. In the “Interest” section of income, where it asks you to enter 1099-INTs, pretend you got one from this bank, enter all the info. They’ll ask if the 1099-INT provided the bank’s id number, and you just click no and keep going.
Just an warning here, there is still no 1099-INT available in your online banking. And, do NOT call their customer service line. It’s just waste of time. Their customer service line reps can not even speak understandable English for anything out of their standard scripting template.
CPA here. Even if you did not include the interest on your return and the IRS finds out, they’ll let you know and you just have to pay the tax plus interests. Honestly, since the tax is not much, the interests are just some pocket money. So whether you amend the return or wait for IRS to give you the notice (sometimes they won’t even audit), you will be fine.
Thanks for the thoughtful and informed response Bob, appreciate it.
In my humble opinion, I will never take the risk of being flagged by the IRS. For substantial errors, the IRS can go back six years. Since many bank bonus chasers use to report only 1099-INT received forms, they are at risk of paying taxes plus interests due to missed 1099-INT forms for the previous six years. I don’t know if not reporting 1099-INT consistently is a substantial error for the IRS. I will never play that game.
No comment on reporting or not reporting interest without 1099-INT, but regarding substantial understatement, it’s 10% of your tax or $5000, whichever is greater.
This is why I think not reporting bonuses for which I don’t get a 1099 is worth the gamble. The interest they charge for underpayment is reasonable; something like 4%.
That was very useful, Bob. Thank you!
My HSBC $350 Bonus posted on 12/22/2016 and was included in my statement ending on 01/13/2017. Since interest must be reported in the year you earn it, I reported HSBC $350 Bonus in my 2016 taxes regardless HSBC has not issued a 1099-INT so far. I had the same issue with other 2016 bonuses such as TD Bank $300 Bonus and CitiBank $500 Bonus. Anyway, as a rule of thumb, I always keep a copy of the statement showing the date in which bonus was paid and report it in my taxes. So, for any bank bonus, 1099-INT forms and/or statements are my taxes supporting documentation.
I though I received my bonus in January but I received it on 12/22. Filed taxes last week (probably the earliest I ever have).
Oh well. Not the end of the world but certainly an inconvenience. Hopefully they will be able to mail me a check for reimbursement as I plan to close the account next month.