Yes, a bank bonus usually counts as taxable income on your 1099, the tax slip banks use to report payments to the IRS. The Internal Revenue Service treats cash bonuses for opening or funding a checking, savings, or CD account as interest taxed at ordinary federal rates, as explained in its investment income rules. That treatment applies in the year the money becomes available to you. It covers the bonus itself plus any regular interest the account earns.
Table of Contents
- Why is a bonus treated as interest?
- Will you get a 1099-INT?
- When does a bonus use 1099-MISC instead?
- How do you report it?
Why is a bonus treated as interest?
A bonus is not a gift in tax terms. It is payment for opening or funding a deposit account. The tax rules place it in the same category as interest.
Timing matters too. Interest counts when you can withdraw it without penalty. You do not wait until you spend it or move it to another account.
Will you get a 1099-INT?
Most account-opening bonuses arrive on Form 1099-INT. Banks commonly list the bonus in Box 1 Interest Income, alongside regular interest. You report that combined total as interest income.
Even a modest bonus usually triggers the form. The Internal Revenue Service requires payers to furnish Copy B of Form 1099-INT for interest of $10 or more, according to its Topic 403 guidance. A $300 checking bonus therefore comes with paperwork.
When does a bonus use 1099-MISC instead?
Some referral or promotional payments take a different path. Those may appear as Other Income in Box 3 of Form 1099-MISC. Intuit TurboTax notes in its explanation of Form 1099-MISC that this form historically used a $600 annual reporting threshold per payee.
Noncash perks can also count. A toaster, tablet, or service tied to opening a savings deposit is treated as interest. IRS rules set low reportable amounts: over $10 for deposits under $5,000, and over $20 for deposits of $5,000 or more.
How do you report it?
Missing paperwork does not erase the income. You must report all taxable interest even if no 1099 arrives.
Use Form 1040 Line 2b for the total. Check these steps before you file: If you earned a $500 bonus plus $40 in account interest, your interest total is $540.
- Match each 1099-INT Box 1 amount to your bank statements.
- Add any bonus that arrived without a form.
- File Schedule B when total taxable interest exceeds $1,500.
- Keep the bonus letter showing the payout date and year.
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