Discover is the latest card issuer to send out 1099 tax forms for referrals, following Chase & American Express. It’s not clear if Discover is only sending out these forms for those who have received $600. There is also a report of cash back match from referrals (cash back earned in the first year is doubled) also being included in the income reported.
Hat tip to Help Me Build Credit
How does discover Debit card know that I am buying a money order when I am using it to buy a money order?
I got a 1099 back in 2016 for referrals (for which i had earned more than $600), haven’t earned more than $600 since, and haven’t received a 1099 since.
The 1099 did NOT include cashback match money, although it did include the cashback match I earned directly from those ereferrals (this is from back when the $50 was cashback, thus doubling, as it was my first year).
They switched to a $50 statement credit on the Discover it this year. Are they giving a 1099 even for statement credit referrals?
A statement credit is as good as cash so I would say yes.
Cash back should be treated the same as a discount. You don’t get it unless you spend money on a product or service. Will the next move be to issue 1099’s for coupons treating them as income?
delete, read it wrong.
weird flex but ok
Do you think this is another way for the banks to discourage churning?
This in no way discourages referrals or churning. It reduces the incentive, but it’s still a bonus for referring a person to a card. Paying a $20 tax on $100 of free money is still a net gain
I churn bank bonuses even though I pay taxes on proceeds.
I go to work and earn an income even though I pay taxes on proceeds.
I operate a business even though I pay taxes on proceeds.
No- this is coming from the Feds.
No different than bank bonus churning. I mean for those into making free money (including myself).
maybe, most likely no. I can see where it might discourage splitting a referral bonus with someone since taxes are now involved.
Another way to redistribute wealth. From poor to rich.
Discover started this from last year (for tax year 2017), not this year like amex.
Interesting, thanks. Only for those over $600?
Yes, only over $600. The refer limit is $500, so they never sent 1099 misc before double cash back in the first year. When they did double cash back, people who received over $300 from refer (double to $600) would get 1099 misc. I know someone got it from discover last year (for tax year 2017).
Wow GG