These are my top recommended credit cards for this month. Let me show you how to get the $450-550 annual fees waived exclusively for US military personnel in my five day, 100% free course.
Military Money Manual has partnered with CardRatings for our coverage of credit card products. Military Money Manual and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Thank you for supporting my independent, veteran owned site.
Check out my review of Lending Club if you're not familiar with it!
I AM NOT A TAX OR FINANCIAL ADVISOR. THIS IS NOT TAX ADVICE. THIS IS BASED ON MY EXPERIENCE AND UNDERSTANDING OF US TAX LAW (WHICH IS VERY LOW) AND LENDING CLUB POLICIES.
My understanding is that Lending Club profits are taxable. However in the 2011 tax year, I didn't receive any tax documents from Lending Club. Many other people probably experienced this as well. What's going on? Here's the answer:
For all Lending Club notes issued on or after 14 October 2008, Lending Club will issue a 1099-OID IRS tax form to you IF:
Interest Receive + Late Fees – Servicing Fees => $10
But they will only issue a 1099-OID PER NOTE. So if you have $25 invested in 1000 notes, chances are any individual note WILL NOT generate $10 or more in interest and late fees for a single tax year. However, you probably will have much more than $10 in interest payments in your total account for the tax year. Therefore, you won't receive a 1099-OID from Lending Club, only a year end statement. The year end statement will list the total interest and late fees you received, so you can use that to fill out your tax return.
The way I listed it on my 1040 last year (2011 tax year) was under the 1099 section, where my bank account interest went. I simply created a line item for Lending Club and then listed the total interest I received. That should be enough to cover yourself if you were ever audited.
Lending Club's official policy statement on taxes is as follows:
Interest and other payments received from your Lending Club Notes may be taxable. Lending Club does not provide tax advice and recommends that you consult your financial or tax advisor.
And here's an entire Lending Club tax information section if you'd like to know more. Jonathan at My Money Blog had similar ideas earlier this year.
Again, this is just based on my experience. Check with a CPA, CFA, or someone who actually understands US tax law and the special situation Lending Club creates. Don't rely on blogs for your tax advice!