Savings account shop tax question

I'm doing a shop that requires the opening of a savings account online. The company is paying $50 for the shop, plus they pay for the $150 opening deposit that is required. Is this $150 a reimbursement for tax purposes or is it income?

I don't know. Obviously I keep the $150 and haven't actually spent it, so on one hand it looks like income. But then again how is this different than being reimbursed for gasoline that you use as well, or returning an item for a refund later? Any legal experts want to chime in?

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If you're not receiving the money until after January 1, deal with it on your income tax in calendar year 2020.

If you're receiving the money in December of this year, wait until the 1099 shows up, and hope it's one of the MSCs that kindly shows income and reimbursements as two separate items (some do; some do not).

Frankly, I feel it's income (you can close the account eventually, and get the $150 back, unless the MSC says you may not). If the MSC says you may NOT close the account, then it's definitely, 100% reimbursement, and not taxable.

About 10 years ago, I was sent to bank branches to buy Visa gifts cards for $25 each. It was an MSC that separated fees and reimbursement, and I earned enough to get a 1099. They considered the $25 to be reimbursements, and so I did also. But that does not guarantee that it was right. I kept and got to use the Visa gift cards.

I know that if you go to a bank and they give you $200 as a bonus two months after you open an account, that they generally report that to the IRS as income. On the other hand, I have had brokerages give me bonuses for opening brokerage accounts, and some of them report it as income and some do not.

So in closing, I have two answers for you. Yes, it is income. No, it is a reimbursement. I admit that I can argue in favor of both answers.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

The fine print on an offer of about $600 in cash for opening, and keeping, a new cheeking AND savings account says that the bank, by law, must report that bonus to the IRS as interest income. While that is not the case for OP, it seems relevant to other posters here

Based in MD, near DC
Shopping from the Carolinas to New York
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Also, the amount used to open the shop is your own money and allowed to be spent anytime After opening. It's not a business expense unless you don't have access to it or get it back.

Thanks for the replies. I think I'll fall just short of the required 1099 for this MSC, so don't know if I'll get a breakdown. The $150 of my own money is required to do the job, but yeah, it's always mine. I don't think it's analogous to bank bonuses, as that money was never mine. I'm leaning towards taxable, but I see arguments both ways.

@quovatis wrote:

Thanks for the replies. I think I'll fall just short of the required 1099 for this MSC, so don't know if I'll get a breakdown. The $150 of my own money is required to do the job, but yeah, it's always mine. I don't think it's analogous to bank bonuses, as that money was never mine. I'm leaning towards taxable, but I see arguments both ways.

Just for clarification, you said in your opening statement that the msc pays the $150 required to open the account. Does this mean they are reimbursing you later together with the fee when you finally get paid for that amount that you spent out of pocket? I am only asking because above you say it is your own money and it is always yours. I am confused. If in fact it turns out they are reimbursing you for the amt spent to open the account it sounds as though it might be non taxable. Although if you get the money they reimbursed you for back from the bank when you finally close the account it sounds like that would be double dipping. In any case I look forward to someday getting an answer from someone in the know to the bottom of this as these types of shops sound very lucrative if you actually get to keep the $150 later AND write it off as a business expense.

What is the minimum for the savings account to earn interest?

"I told myself to quit you; but I don't listen to drunks." -Chris Stapleton

@sandyf The MSC states the fee is $50, and they "will reimburse for the $150 opening deposit". I am required to deposit the $150 (at my expense), and expect $200 in total payment/reimbursement. So they do use the word "reimbursement." My shop was approved, just waiting on payment.

@HonnyBrown The minimum to earn interest in the account is $1, but that's irrelevant for the shop.

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Savings account shop tax question

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