["2024.2 update"] Referral tax forms from different cards are now starting to arrive. If the referral bonus is cash, it’s reported at the amount received. If it’s points, different cards handle it differently—here’s a quick rundown.

  • Discover: Issued separately for each card; the taxable amount is based directly on the cash reward received. The tax form will list the amount you need to report and the card number.
  • Chase: Issued as one combined form, with each card’s amount itemized. Ultimate Rewards are valued at 1 cent/point, and Marriott is also valued at 1 cent/point (a bit of a sting, but there’s nothing you can do about it),
  • AMEX: Issued separately for each card. Membership Rewards are valued at 1 cent/point. Hilton is valued at 0.67 cent/point (a bit of a loss compared with Hilton’s value)

About Credit Cards and Tax Filing

Tax filing is an essential part of life in the United States, and credit card issuers also send tax forms to the IRS and to users in batches every January through February for the previous tax year. For example, during January and February 2023, you would receive the tax forms mailed to you by your credit card issuer for filing your 2022 tax return.

Credit card issuers report income that may be taxable to both you and the IRS. If that income exceeds $600, the tax form must be mailed to both you and the IRS; if it is below $600, the issuer may or may not issue it depending on the situation. But for you, if that income is taxable, you still need to report it. Credit card issuers generally use 1099-MISC for miscellaneous income. For example, if you referred a friend to apply for a credit card and received a $500 referral bonus from the issuer, the issuer would record that amount and mail both you and the IRS a 1099-MISC. Below is a 1099-MISC tax form I received from AMEX this year.

As we’ve discussed before, sign-up bonuses, everyday cashback, retention offers, AMEX Offers, and similar rewards that are triggered by spending generally do not result in a tax form. Referral bonuses, sweepstakes winnings, and similar rewards may be treated as miscellaneous income and reported on a 1099-MISC. Some reimbursements or compensations depend on the issuer.

That said, different credit card companies handle 1099-MISC a little differently. Below is a summary based on my own experience and some data points I found online.

Capital One

A few days ago, I saw a report from View from the Wing saying that Capital One’s tax forms include a wide range of items, such as travel reimbursements, referral bonuses, compensation for mistakes made to customers, Global Entry reimbursements, and more, which is very surprising. For example:

  • This user received the $300 travel reimbursement on the Capital One Venture X, a $200 (20,000) referral bonus, and a $100 Global Entry reimbursement, and also received a 1099-MISC
  • This user received two $300 travel reimbursements on the Capital One Venture X, a $200 (20,000) referral bonus, and a TSA Pre reimbursement, and also received a 1099-MISC
  • The user in the original post received compensation worth 10,000 points, TSA Pre, and referral rewards, and all of those items were included on his tax form

Capital One also responded officially with the following

Required reportable payments include certain credits or gifts given to customers including the TSA Pre/Global Entry statement credit and courtesy credits via customer servicing; reportable payments must equal or exceed a total of $600 within a year for a customer to be eligible to receive the 1099-MISC form.

In other words, under their tax rules, compensation and reimbursements are included in 1099-MISC. Implicitly, whether you should actually report them is not their concern; that is up to you or your tax preparer. This is very strange, because Chase and AMEX both have plenty of travel reimbursements and even compensations caused by system issues, and I’ve never heard of those being included in 1099-MISC.

AMEX

AMEX generally only issues tax forms for referral bonuses, with values assigned as follows: Hilton points at 0.67 c/p, and Delta miles and Membership Rewards at 1 c/p (100 points = $1); cash is valued at face value. Usually, a combined referral total across several cards has to exceed $600 before a tax form is triggered. At that point, even if the referral income from one card did not exceed $600, you will still receive a separate tax form for that card. If you receive one, there’s no need to panic: when you file your taxes, just add it under “other income,” enter 1099-MISC as the category, and attach the form the bank sent you. This kind of income should not affect your status or a green card application (if you fail to report it, that could be a problem).

  • You can tell from the tax form that it was mailed by AMEX and that the content is the referral program

AMEX’s pattern is to issue one separate 1099-MISC for each card. If you need to file taxes, remember to add the amounts together and include all of the 1099-MISC forms.

Chase

Chase generally also only issues tax forms for referral bonuses, but it seems to send one combined tax form for all cards. In terms of valuation, UR is calculated at 1 c/p, and cash is calculated at the cash amount. The referral amount for each card is listed very clearly.

Discover

Discover’s referral bonus is capped at $500 per year, so it generally does not trigger a tax form. But in theory, if you have this income, you are supposed to report it on your own.

If you hold two Discover cards, it is possible to reach $1,000 in referral bonuses, and then you will receive a 1099-MISC.

Other Banks

For Citi, Barclays, and BofA, only a very small number of users have referral bonuses, and usually only 1-2 cards are involved, so there are very few data points online. If you have any, please feel free to share them.

Do You Need to File Taxes?

We’ve said this many times, and the core idea is:

  • Receiving a tax form does not mean you have to report it; it depends on whether that income is taxable
  • Not receiving a tax form does not mean you don’t have to report it; it depends on whether that income is taxable

Of course, many people may not be able to determine whether something is taxable. For typical nontaxable income, the IRS has a clear definition. The nontaxable income item that is most useful to us is:

  • Cash rebates from a dealer or manufacturer for an item you buy

Here, cash rebates related to credit cards can be extended to include the following, in my personal view:

  • Cashback earned from credit card spending
  • Credit card sign-up bonuses
  • Credit card retention offers (which generally also require spending xxx to get xxx)
  • Credit card reimbursements (since they also require spending before you get them, I personally don’t think C1’s figure needs to be counted in other income)

But some forms of compensation, such as courtesy credits for system errors or unconditional fee-waiver retention offers, are trickier. For those, it’s best to consult a CPA.