Chase Sending 1099s for Referral Bonuses

Chase Sending 1099 Tax Forms-Referral Bonus

 

Chase is Sending 1099-MISC Forms for Credit Card Referral Bonuses Given in 2018, per this Reddit thread. While Chase also sent out 1099s in 2017, for the 2016 tax year, Chase later retracted the amounts. This time it's less likely there will be a retraction, as the IRS appears to have clarified its reporting requirements to the banks: both AMEX and Chase are sending out 1099s for bonus points earned by referring others to credit cards, even for amounts under $600, which used to be the threshold for when these 1099-MISC were sent out. And Chase does note on its Refer a Friend and Refer a Business referral pages that you are may receive 1099-MISC forms for taxable income that is being reported to the IRS:

“Your participation in this program may result in the receipt of taxable income from Chase and we may be required to send to you, and file with the IRS, a Form 1099-MISC (miscellaneous income). You are responsible for any tax liability, including disclosure requirements, related to participating in this program.”

 

Point Value for 1099-MISC: 1 Cent per Point

Chase is assigning a value of 1 cent per point, regardless of the points program: Ultimate Rewards, Hyatt points, Marriott points, etc. 1 cent per point is fair for Ultimate Rewards, because if you choose cash back as your redemption option (definitely NOT recommended) your points are indeed only worth 1 cent per point. Fortunately, all savvy travelers know that Ultimate Rewards points can be redeemed for their greatest value, for example 5-10 cents per point, when transferring to an airline frequent flyer program to redeem for first class or business class award tickets.

That said, it's much harder to make the case that Marriott points are worth 1 cent per point. Recall that Starwood SPG points converted to Marriott points at a 1:3 ratio, with each SPG point tripled when converted. SPG Starpoints transferred 1:1 to a variety of airline frequent flyer programs, with a 25% bonus when transferring in increments of 20,000 points. Because of this, many valued their Starpoints at somewhere between 2-2.5 cents per point. Since each Marriott point is 1/3 of an old Starpoint, that would give a value of 0.67-0.83 cents per Marriott point, less than 1 cent per point. That may deter some folks from future Marriott referrals, as they are likely to disagree with Chase's valuation of a Marriott point.

 

Chase Signup Bonuses Unaffected

The 1099-MISC only apply to Chase referral bonuses, as these don't have a minimum spend to receive them. All signup bonuses do require a minimum spend, and as such are considered rebates, which aren't taxable, rather than income, which is taxable.

 

Have you received a 1099-MISC form for Chase credit card referrals from 2018? 

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