Posted by William Charles on January 26, 2020
Credit Cards

Published on January 26th, 2020 | by William Charles

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Chase Sending Out 1099s For Referral Bonuses (1¢ Per Point)

Chase is sending out 1099 forms if you’ve referred somebody to a card and received a referral bonus. Chase is valuing points at 1¢ per point, Chase sent out 1099 forms for referrals last year as well. The main difference seems to be that this time Chase is sending out 1099 forms for people that received less than $600.

Update: Chase has also included promotions from Chase Pay as little as $15 as well and annual fee waivers of $95



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allen
allen

but i don’t want to pay taxes

Bruce
Bruce

Do they send out more than one 1099? Received one for a bank bonus, but nothing from my referrals

Ray
Ray

Yes

Ben
Ben

Bank bonus will be a 1099-INT, referrals would most likely be a 1099-MISC (basically considering the bonus to be a commission they pay for your work in bringing them a customer). The 1099-INT is passive income, while 1099-MISC might be “earned” and trigger self-employment tax. There was a discussion on this DoC’s post for Chase 1099s last year: https://www.doctorofcredit.com/chase-also-sending-out-1099s-for-referral-bonuses-1%C2%A2-per-point/

CericRushmore
CericRushmore

These 1099-MISCs will not trigger self-employment tax. You can list them as awards/prizes under the 1099-MISC when you are doing your taxes. H&R Block even specifically asked me this last year in the software when I was going through it.

qmc
qmc

Yes, I got 4 so far:

1099-int personal

1099-int business

1099-misc business (referrals)

1099-misc $5 online statements signup, but notes it would also include customer courtesy credits, etc.

Frank

Gotta love paying taxes on “Points earned are not the property of the Cardholder and are not transferable, have no cash value”. This is like if Starbucks sent you a 1099 for earning gold stars.

Celia
Celia

Earning stars is by purchasing items or completing bonuses for different purchases. A referral isn’t either of those, no purchases or use required. Though it sux to pay taxes on those, we should be glad we don’t pay taxes on the points we earn or SUB.

YoniPDX

Yes, but I think that I would rather pay taxes on referrals and earnings at 1cpp than on redemption FMV (most of my redemptions for travel have been partner intl travel in premium cabin 5cpp~11cpp).

But my preference is to pay zero taxes on this hobby.

Celia
Celia

Totally agree not to have to pay any taxes but I have to ask, where are you paying taxes on redemption?

YoniPDX

No, I haven’t but ACV of our redemptions in 2019 was $50K+ in F & J seats for me and DW, 2018 was <$10K.

So while I despise paying one penny more than I have to, the time-money equation for fighting or chasing missing small points (unless i I need it for reward threshold, it not normally worth the effort). Celia

YoniPDX

Frank

I Agree but the problem is the 1099 don’t specify the income as referral

– I suppose one could challenge Chase or Amex to provide proof of payment; which if a bank bonus or intrest or $750 or $XXX posted to an account they could but they can’t show cash payment for points.

If you sent a certified letter(s) to JPMC AmEx with request of proof of income that was made in US legal tender or to reissue/retract 1099. I think that this maybe the only way to call their bluff.

Not a tax attorney, nor do I play one on TV or the internet.

Ben
Ben

That’s not a valid argument, because UR points are redeemable for cash.

Burton

I wonder why they would follow the $10 IRS threshold for interest and don’t issue unnecessary 1099-INTs but would ignore the $600 IRS threshold for 1099-MISCs. Both are optional below the threshold but it adds unnecessary administrative cost.

Jack
Jack

The threshold is a guide only, designed to reduce paperwork for small businesses. So I don’t have to send a 1099 to every minor job I contract out to. But if chase is writing off those referral bonuses, they are just covering their butts.

Ed K
Ed K

First of all, I’m not a tax expert. I believe their referral terms have/do state that the bonuses could trigger a 1099, right? Just asking, not implying. I realize some may have assumed they would not receive a 1099 if the total was under $600 for the year, but just asking about the terms.

I do agree that if the referral points have no cash value then what’s the point of the 1099. It would then fall under “coupon” or “discount”, but only after you had to also spend. Is that true?

Burton

“Your participation in this program may result in miscellaneous income received from Chase and we may be required to send you, and file with the IRS, a Form 1099-MISC (Miscellaneous Income) or Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) for the year in which you participate and are awarded the benefits of the program. You are responsible for any tax liability related to participating in the program. Please consult your tax advisor if you have any questions about your personal tax situation. ”

They are not required to send out 1099-MISC for <$600 which is the confusing part to me as sending seems inconsistent with their terms.

Ben
Ben

Focus on the parts other than “may be required”. Looking at the other terms in the same paragraph make it clear that they are allowed to send you the 1099-MISC even if it isn’t required…

“Your participation in this program may result in miscellaneous income received from Chase. You are responsible for any tax liability related to participating in the program.”

O
O

Does anyone know if this applies to non UR points, say for the SW referrals?

Eric
Eric

The 1099 I received included the statement credits I got as a retention offers for my personal cards.

One $70 and the other was $100.

However, it didn’t include the SW personal referral although it included 3 x CIP referrals.

Chris
Chris

Can anyone confirm if the 1099 document is showing up on the Chase website as well? I received 1 referral bonus last year but the website shows no tax documents at this time. Yes I know they don’t have to mail it till Jan 31st in most cases, but you can usually get these documents online before you see them in your mailbox.

Ian

Anyone received a 1099 for business card referrals?

Josh
Josh

yes that was the one i received for $600

Chris
Chris

I really wish they made it easier to decyphir what referral was what..

I have one for $10 on my list of line items…

Jeff H
Jeff H

My Chase 1099 for my referrals breaks it down to referral dollars per card number.

My Chase bank 1099s have the relative checking account number on them. They sent separate 1099s for each checking account.

Greg
Greg

Yeah I just got hit by them. Looks like it’s based on the date the bonus posted, because the referral I did end of December wasn’t on there, but all 3 CIPs were.

aubergine
aubergine

This is a fine point, but just because you have been 1099’d on something doesn’t mean you have to report in your taxable income. It will create a discrepancy at the IRS, and in some cases they will send you a letter about it. If you are prepared to defend/explain why you excluded it, you may be able to not pay the taxes on that ‘income.

For most normal people, getting into tax arcana over a $100 isn’t worth it, but sometimes banks were 1099’ing borrowers for balances that were written off post foreclosure on homes. There was a way for tax insolvent (different from bankruptcy insolvency) to get those 1099’d amounts removed from their income, and they were the ones most likely to use the above procedure.

Keep good records, respond to IRS written letters, and it may work out.

Interestingly, if Chase is 1099’ing these amounts, they are treating the marketing expense of referrals differently than generic advertising. It’s an unhelpful (to their business people) legal view their tax counsel must have imposed on them. After their members get 1099’d once they are much less likely to be proactive with referrals, unless they are rankt predators or something.

Steve

1099’ing all amounts could increase referrals, if people were stopping referrals when they reached $5xx, to avoid hitting $600.

VL
VL

Yep, this is exactly what I did (after they started 1099ing for 2018). Exactly my point – if I knew I would get 1099 anyway, I would have probably generated another one or 2 referrals. Either way with Chase where URs have actual cash value those 1099s can be justified (unlike loyalty points, which have flexible value and may expire in case of Amex).

qmc
qmc

> sometimes banks were 1099’ing borrowers for balances that were written off post foreclosure on homes

(I am not a tax lawyer), but to my understanding, they definitely should have been writing 1099ing ALL of them until congress went and exempted it, giving away more tax money. (the bank still gets to deduct it as a loss, but it was no longer collected from the borrower)

Frank Rizzo
Frank Rizzo

When can we expect to get them? In the past you had no idea if you were going to see them at all, or if they would show up April or May after you already filed.

Celia
Celia

They’re being sent out now. I think the ones that showed up after filing were adjusted ones and Chase agreed to pay the refiling fees.

https://www.doctorofcredit.com/chase-to-send-out-corrected-1099-misc-forms-will-pay-for-amended-filing-fees/

Ryan
Ryan

I have received two 1099-MISC last week.
– Referral Bonus $500
– Ink Plus Annual Fee Credit $95
– Freedom e-statement Enrollment $10

Andy
Andy

– Ink Plus Annual Fee Credit $95 <— I wonder if this is from retention to keep the card?

Ryan
Ryan

Yes.

StarAdmiral
StarAdmiral

WTF how can you be taxed on a refund

BUT_WHY_MALE_M0DELS
BUT_WHY_MALE_M0DELS

because it isn’t a refund. it is a credit.

Ben
Ben

You shouldn’t be. It’s clearly a credit based on spending (effectively 100% cashback).

qmc
qmc

You should be. It’s not spending, it’s a fee.

bullfrog23414
bullfrog23414

The AF credit is really weird – I don’t see how that’s conceptually different from a sign-up bonus (i.e. a rebate).

It just doesn’t make sense to me. I doubt they’d 1099 for a card with terms where the AF is waived the first year, but if they charge it and then waive it it’s income?

Very very odd.

Andrew Donshik
Andrew Donshik

yeah that’s horseshit and i’d fully contest it.

qmc
qmc

It’s a customer service courtesy credit, that happens to be in the amount of the annual fee, but is not a rebate on spending. You’re not buying anything, there’s no tax basis.

Bill
Bill

My wife just got one. Will need to file a schedule C but should be able to use her annual fees as business expenses to offset the income.

Newbie
Newbie

All our chase OFFERS are for get $50 for bank referral and miles for credit cards.
But we make sure not to refer anyone. I even asked them to remove $5.00 for paperless credit.

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