Hamilton Beach Toaster
Hide Caption

Free toasters from bank may be taxable

Don't Waste Your Money

a a a a
Share this story

If you win money on a game show, you have to pay taxes on it. If you win a car in a contest, you have to pay taxes.

But what about the toaster you get for opening up a checking account? Nowadays, even that may be taxable.

Free Tickets? Sure!

Everyone loves a freebie when they open a new bank account, whether it's $100 cash, small appliances, or tickets to a game.

That's what Don Rolfes says his mom was offered when she opened a checking account last fall.

"She started a checking account," Rolfes said.  "And sometimes there are incentives for starting an account with a different institution. And the woman said 'here's some NFL tickets' and that's all there is to it."

But Rolfe's mom wasn't expecting what then arrived in her mailbox.

Congratulations, Now Pay Taxes

"A couple of weeks ago we received a 1099, which states that my mom received $120 of income," Rolfes said.

A 1099?  Rolfes -- who does his mom's taxes for her -- says that means she will have to pay taxes on her free gift.

"It is an economic benefit, so it is taxable.  The main issue I have with it is that nothing was discussed about tax issues, and she didn't know about it," Rolfes said.

A bank spokesman tells us that it now issues 1099's for any gift worth more than $10, due to tougher new IRS rules on gifts. In the past, the cutoff was $500.

Don Rolfes says he just wished his mom had been aware of the consequences, and would not have taken the NFL tickets had she known about it.

"Absolutely not, she is not a sports fan," he said. "She actually did not end up using the tickets, she gave them to a friend."

Many Banks Doing This

A bank spokesman tells me the tickets should have come with a letter attached explaining the gift would be reported to the IRS.

Other banks are now reporting gift card bonuses, and free frequent flier miles as taxable, according to the Wall Street Journal.

And with the new $10 threshold, even that free toaster may be taxable.

So be careful with those freebies, so you don't waste your money.

_________________________________

Don't Waste Your Money is a registered trademark of the EW Scripps Co.

"Like" John Matarese on Facebook

Follow John Matarese on Twitter (@JohnMatarese)


   

Copyright 2014 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Print this article

Comments

Hmm... It looks like you’re not a WCPO Insider. or Subscribe now to contribute!

More DWYM
Need MRI or CT scan? How to save hundreds
Need MRI or CT scan? How to save hundreds

John Matarese shows a great alternative to expensive hospital scans

Apps that can be dangerous for children
Apps that can be dangerous for children

Is it really a friend or is it a predator? Unless you are actively monitoring your child's smartphone and tablet apps, you are not…

Free Shred Day this Saturday
Free Shred Day this Saturday

John Matarese has details on a  major free shredding event

How to get rid of old electronics for cash
How to get rid of old electronics for cash

Do you have an old computer or an ancient cellphone sitting around your house? With Earth Day upon us, it’s the perfect time to do away…

Popular app turned out to be a fake
Popular app turned out to be a fake

John Matarese warns why trusting apps just because they are popular is not a great idea

Swifty gas station closings mean end of an era
Swifty gas station closings mean end of an era

John Matarese reports on the end of full-service gasoline.

App of the Week
App of the Week

Check out John Matarese's latest money saving smartphone apps.

The olive oil you buy may be a ripoff
The olive oil you buy may be a ripoff

John Matarese has a caution about some supermarket olive oil

Magazines now ask you to renew constantly
Magazines now ask you to renew constantly

John Matarese has a caution for magazine subscribers

Best places to find free public Wi-Fi
Best places to find free public Wi-Fi

John Matarese lists the best places for finding free public Wi-Fi and a caution before you use the service.