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5 hidden costs of checking-account bonuses

You will split the bonus with Uncle Sam
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You will split the bonus with Uncle Sam

Adding an extra chunk of cash to your account may give you extra spending money now, but you will probably have to fork over some of those funds to the government when tax season arrives.

"The amount of tax paid on a cash bonus or prize depends on an individual's overall tax situation," says Jackie Perlman, CPA, principal tax researcher for The Tax Institute at H&R Block.

For example, Perlman says if the new checking account holder's marginal tax rate is 28 percent, that's the tax percentage that will have to be paid on the bonus.

Think you're in the clear because the bank bonus is a product, gift card or some other noncash incentive? Think again. If the value of the gift is more than $10, Perlman says, the bank is required to report the fair market value of the gift and treat it as taxable interest.

Be sure to determine your tax bracket before you accept checking-account bonuses to understand how much of the money will truly be yours to spend or save.


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