It’s now 1099 season, and some people have been surprised to receive 1099s on their credit cards due to referral bonuses.
Please consult with your tax advisor for tax advice. This article is for informational purposes only.
Credit card signup bonuses and rewards aren’t typically taxable and don’t usually get 1099ed since they are considered rebates on the purchase, like a discount.
However, if you earned rewards from a refer-a-friend program, that would constitute taxable income. Some checking accounts have referral programs as well, and that will work similarly.
Banks are required to issue a 1099 if the amount earned was $600 or more. Some might send for lower amounts too, though that’s not common. Technically, you’re supposed to report smaller amounts even if the bank doesn’t send a 1099.
Some banks even send out forms for points earned via referrals. If you feel they over-priced the value of the points, you can dispute the amount. Viewfromthewing has more details on how to do that.
Read: Current Credit Card Referral Offers
All interest income and bank signup bonuses will get a 1099-INT form, even for small amounts as low as $10. I once had a bank send me a 1099-MISC for a $125 bank bonus, but in any case, they always send some tax form for small amounts too.
Amex
A report indicates that they do not 1099 for points referral bonuses. Conversely, they reportedly do 1099 for SPG prize bonus points (with a value of 1.5 cents per point). I assume they would 1099 for cash referral bonuses in the amount of more than $600, like for Blue Cash referrals.
For year 2018, Amex did a new thing and sent out Form 1099s for all credit card referral bonuses. They put a value of 1 cent per point on all points (includes Membership Rewards, Marriott, SPG, Delta), with the exception of Hilton which was valued at .67 cents per point. Discussion on that here.
Capital one
Capital One does send out 1099s, even on a referral bonus as small as $20. Note, this may have been a checking referral which might work a bit differently.
Chase
Chase sent out 1099s for referral bonuses made during 2016, at a value of 1 penny per point, but they retracted on that. They then reversed again and sent out 1099s for referral bonuses made during 2018.
Citi
Citi doesn’t currently have a referral program.
The place where people have been getting 1099ed from Citi was for their checking bonuses. All cash bonuses get a 1099, but Citi sends out 1099s even for point bonuses, provided that you received more than $600 in value from the points in that calendar year. You can see a bit more detail here.
Discover
Discover does send out for amounts over $600. They do seem to have a weird math how they compute the $600 so don’t be shocked if you get one for less.
U.S. Bank
U.S. Bank does offer referral bonuses. Data points needed whether they send out 1099s.
View Comments (67)
Feb 2020 Update: Amex sent me two 1099-MISC for refer-a-friend for TY 2019. Looks like they're counting 1c/MR point as the cost.
Navy federal sent me and my family members 1099s for the $50 referral bonus back in 2014.
I work for CapitalOne and we don't send out a 1099 for our Spark Business 2% rewards
I feel as though we have pretty good ground to argue to the IRS that this is considered part of the credit card benefit and THUS a rebate that is not taxable.
Had i not had the credit card i could not have referred someone to the card. Its part of the decision in whether or not to sign up for the card.
seriously this is the line we have to take. if the IRS comes after us for credit card referrals then what is to stop them from coming after us for credit card sign up bonuses?
Got a 1099 from AmEx for $200. Unclear what the valuation is on points but I had at least 2 referrals through friends and 3 self referrals.
I received 3 1099 too. It breaks down like this: plat - 3, BBP - 1, BGR - 1
All applied with SSN for biz cards. Never redeem any during whole 2018 at all.
well fk this sucks.
Got 1099s for Amex referrals as well this year, ugh
Was that for MR bonuses or cash bonuses? How much was your calendar year total that came on the 1099?
Received couple of 1099-MISC from Amex for referral bonuses in 2018. None of the referral bonus was in Cash but received this tax document.
Here is DP from my side:
SPG - 3, Hilton - 4 , ED - 3. Stated values in the Tax form are 1cpp for SPG and MR points. Hilton is - 1.25 cpp. (really that valueable?? :))
Any idea to dispute any of them?
Amex has never done this before so there are no DPs on what to do. Personally I'm going to be waiting until April to file in case Amex "corrects" any of this (like Chase did a couple years ago).
> Any idea to dispute any of them?
You can declare a lower value than the 1099 you've been issued by including a statement with documentation to your tax return explaining why the value should be lower than what the 1099 issuer stated. Increases likelihood of IRS follow-up of course.
Jf the IRS audited me over my hilton bonus, I could easily show them my hilton points are really worth 0.2cpp by showing thats what I would get if I redeemed them for something like amazon.
I dont know why people are scared of IRS audits. My family has been audited before over a $2000 brokerage bonus that never actually paid out decades ago and since we did everything according to the books they didnt find anything, so they left us alone.
Also because the IRSes budget has been cut a ton, they dont really go after people with incomes under 500K a year anymore. They like to focus their efforts on people with millions of dollars income because this yields a potentially larger payout for the effort.
Now of course you should still do your taxes as truthfully as possible.
>Also because the IRSes budget has been cut a ton, they dont really go after people with incomes under 500K a year anymore. They like to focus their efforts on people with millions of dollars income because this yields a potentially larger payout for the effort.
It's the opposite.
SHIT
Given that many of the1099 bank bonuses are reported as income, can these same 1099's qualify as earned income and used to fund solo/sep IRAs for those who are self employed (no employees)?
Just got my 1099-INT for my U.S. Bank checking bonus.
Happened upon this page looking to see if I should expect any others, like maybe M&T.
Hello,
I received $800 from my leasing office for referring my friend for a new lease. Please let me know if this referral also needs to be shown in form 1099.