After spending the last two evenings pulling our tax paperwork together, I wanted to share a little tidbit on documenting your Lending Club earnings. Here’s the scoop…
Lending Club tax paperwork
For all loans originated prior to 10/14/2008, Lending Club will issue IRS Form 1099-INT if the total interest received for all of these loans in 2009 was $10 or more.
For all loans originated on or after 10/14/2008, Lending Club issues an IRS Form 1099-OID (Original Issue Discount) for earnings in excess of $10 on a per-note basis.
If you received any other payment from Lending Club, such as signup bonuses or affiliate referral fees, you will receive an IRS Form 1099-MISC if the total of such payments was $600 or more.
So… In the first case, they aggregate earnings on all notes together and report them in a lump sum using a 1099-INT (assuming the total is $10 or more). In the second case, they will issue a 1099-OID for any individual note that earned more the $10 in 2009. This “per-note” business is annoying, but it’s been a legal requirement ever since Lending Club registered with the SEC.
How to get your Lending Club tax info
If you’re expecting either a 1099-INT or 1099-OID from Lending Club, you should be able to download them by logging in and visiting the “Statements & Documents” page (click “Statements” in the page header).
If you have any income from Lending Club that wasn’t reported on a 1099, you’re still required to pay taxes on it. In this case, you should download your year-end statement and get the value from there. This document is likewise available on the “Statements & Documents” page.
Unfortunately, the year-end statement does not list your fees paid (investment expenses are tax deductible). This means that you’ll have to download the individual monthly statements and add up the fee information. I’ve already contacted Lending Club to ask them to add this info to the year-end statement. If you’d like to see this change, I suggest that you do the same.
A word of warning: If some of your income is documented on a 1099 and some of it isn’t, be careful not to pay taxes on it twice. To determine the amount of unreported interest income that you received, take the value on your year-end statement and subtract off the amount reported on your 1099 form(s).