I switched the brokerage for a taxable investment account last year. The new brokerage reimbursed the transfer out fee of $50 from my old brokerage. I don't have my 1099s yet but I noticed in the online tax information at my new brokerage, it has that $50 as taxable income. Is this correct? Since it's a reimbursement it doesn't seem like it should be. Unless perhaps my old brokerage would put -$50 on my 1099 from them? That seems unlikely though.


Since it's not a rebate (i.e.: reimbursement of money you paid to them), it is a taxable income. It is essentially a sign-up bonus, they have no obligation to reimburse you for anything by law.

This is usually reported as interest income or MISC income on 1099 (if it's MISC - be careful to mark it properly if you prepare your own taxes, otherwise it may be added to your self-employment income).

The $50 you paid as the transfer fee can be deducted as investment expense, subject to the 2% AGI threshold.

  • Man, what a raw deal. Thanks though.
    – Craig W
    Jan 29 '14 at 4:09

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.