Chase 1099 for referral & other bonuses: paperless, retention, etc [Consolidated]
Feb 24, 2022, 8:17 am
#76
Join Date: Aug 2005
Location: Brooklyn
Programs: Delta Diamond, Bonvoy something good; sometimes other things too
Posts: 5,051
Since I earned 60k referral, can I decline 100 points to be below the threshold for 1099 reporting? Not trying to game the system or anything but I don't believe frequent flyer/ reward points are taxable even by the IRS so disagree with the whole concept of getting a 1099 for this.
Feb 24, 2022, 11:43 am
#77
Join Date: Feb 2003
Location: NY Metro
Programs: SPG Titanium, United Premier 1K
Posts: 1,601
That's your opinion but does the IRS state what the value of these points are? if not, then its well within my rights to try to not get a 1099 and declare the value as I see fit and the IRS is well within its right to dispute/ question that.
Feb 24, 2022, 12:23 pm
#78
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,959
Feb 25, 2022, 7:11 am
#79
Join Date: Sep 2011
Posts: 1,857
What flavor referral points did you earn? I assumed UR but that's not necessarily the case.
Feb 25, 2022, 7:11 pm
#80
Join Date: Feb 2003
Location: NY Metro
Programs: SPG Titanium, United Premier 1K
Posts: 1,601
Feb 25, 2022, 7:14 pm
#81
Join Date: Feb 2003
Location: NY Metro
Programs: SPG Titanium, United Premier 1K
Posts: 1,601
Feb 25, 2022, 7:19 pm
#82
FlyerTalk Evangelist
Join Date: Jul 2008
Location: IAH
Programs: DL DM, Hyatt Ist-iest, Stariott Platinum, Hilton Diamond
Posts: 12,795
I don't think any reasonable argument would be that a UR point would be worth less than a penny, but I'll leave that argument for somebody else. Just because you choose to redeem them for less than they're worth doesn't mean they're worth that lower value.If you want to avoid getting a 1099 for referral bonuses my suggestion would be to not share your referral link. It's like abstinence, it's a fool proof way to not get referral points.
Feb 26, 2022, 9:31 am
#84
Join Date: Feb 2003
Location: NY Metro
Programs: SPG Titanium, United Premier 1K
Posts: 1,601
And yes, I disagree with the concept of taxing points at all but that point aside, if I do have to pay taxes on it, then I am not paying a penny over what I need to based on my valuations.
Apr 9, 2022, 6:49 pm
#85
Join Date: Apr 2018
Posts: 155
I’ll add just a little bit to the wise counsel of our esteemed members above (mia, beltway, RNE).
- For high “velocity” (approaching churning) applications think very carefully about getting to 5/24. Once at 5/24 Chase will not approve ANY other cards, biz or personal, so if a once in a lifetime offer comes along you would not be able to jump on it. You obviously understand the concept. FWIW, I’ve was at LOL/24 for many years, (intentionally) got down to 1/24 a couple of years ago (sorry to write that COVID actually helped in that regard), approved for 10 Chase cards in the past 20 months only 3 of which are personal and I plan to stay at or below 4/24 until Chase changes the policy or an incredible unbelievable amazing once in a lifetime offer comes along.
- I’ve also thought about the (new) IHG biz and Hyatt biz cards as they do not add to 5/24, pulled the trigger on both when they were relatively new products. There are anecdotal reports that for a brand new credit card product Chase, notwithstanding anything written above by myself and others, is more liberal with approvals perhaps even including “waiving” 5/24. I certainly wouldn’t hang my hat on that but it’s something a high velocity potential applicant should be aware of.
- My theory (HT Anne Elk) is that with (relatively) new Chase Hyatt and IHG BIZ cards, it’s possible (if below 5/24) to “churn” a SUB once every 12 months with applications for the “same” card being once every 24.5 months, (hopefully for all of us) it’s a marathon, not a sprint.
- If you want to remain in Chase's good graces, no (zero, nada, zilch) MS (which is sometimes tempting to meet minimum spends). FWIW, I suck it up and pay the Fing 1.96% (federal), 2.25% (state) or 2.35% (local) juice* on estimated tax or tax due payments to help meet minimum spends.
Good luck
.
(* “juice” in the fee/gambling vigorish connotation. 4% to 7.9% to “buy” the 4 or the 10 at craps table is usury
.)
- For high “velocity” (approaching churning) applications think very carefully about getting to 5/24. Once at 5/24 Chase will not approve ANY other cards, biz or personal, so if a once in a lifetime offer comes along you would not be able to jump on it. You obviously understand the concept. FWIW, I’ve was at LOL/24 for many years, (intentionally) got down to 1/24 a couple of years ago (sorry to write that COVID actually helped in that regard), approved for 10 Chase cards in the past 20 months only 3 of which are personal and I plan to stay at or below 4/24 until Chase changes the policy or an incredible unbelievable amazing once in a lifetime offer comes along.
- I’ve also thought about the (new) IHG biz and Hyatt biz cards as they do not add to 5/24, pulled the trigger on both when they were relatively new products. There are anecdotal reports that for a brand new credit card product Chase, notwithstanding anything written above by myself and others, is more liberal with approvals perhaps even including “waiving” 5/24. I certainly wouldn’t hang my hat on that but it’s something a high velocity potential applicant should be aware of.
- My theory (HT Anne Elk) is that with (relatively) new Chase Hyatt and IHG BIZ cards, it’s possible (if below 5/24) to “churn” a SUB once every 12 months with applications for the “same” card being once every 24.5 months, (hopefully for all of us) it’s a marathon, not a sprint
.- If you want to remain in Chase's good graces, no (zero, nada, zilch) MS (which is sometimes tempting to meet minimum spends). FWIW, I suck it up and pay the Fing 1.96% (federal), 2.25% (state) or 2.35% (local) juice* on estimated tax or tax due payments to help meet minimum spends.
Good luck
.(* “juice” in the fee/gambling vigorish connotation. 4% to 7.9% to “buy” the 4 or the 10 at craps table is usury
.)Chase is reporting redemptions to the IRS and sending MISC1099 forms to US residents, when value exceeds 600 USD... once they report it, there is nothing anyone can do but to pay the tax.. .BUT here is the issue:
When someone is allotted a sign on bonus - i.e. they didn't do ANYTHING to get the points - CPAs view that the value of this is taxable..
BUT
When one charges the credit card, accumulates the points and THEN redeems the points, IRS considers that 'rebate' and not income earned, and is not taxable.
Chase does NOT make any distinction it appears between the bonus points (NOT Earned) and the regular points (EARNED) through card activity. Chase says "Talk to IRS"... IRS says "we don't know about your points program and whether or not this was a "bonus", so talk to Chase"....
Apr 9, 2022, 7:08 pm
#86
Join Date: Dec 2004
Posts: 7,905
Skytizen, Did this actually happen to you for credit card points or was it for earning points for referrals or a checking bonus? The IRS has said credit card points earned from purchases are considered a rebate and not taxable so you can correct this if it happened.
Edited to add, https://www.irs.gov/pub/irs-drop/a-02-18.pdf
Edited to add, https://www.irs.gov/pub/irs-drop/a-02-18.pdf
Last edited by rrgg; Apr 9, 2022 at 7:51 pm
Apr 9, 2022, 7:37 pm
#87
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,959
New account bonuses for bank accounts are taxable, but new account bonuses for credit cards are not, and Chase understands the regulations. They could make an error, but it isn't general practice.
Apr 10, 2022, 8:24 am
#88
Join Date: Feb 2011
Location: NYC suburbs
Programs: UA LT Gold (BIS), AA LT Plat (CC SUBs & BD), Hilton Dia (CC), Hyatt Glob (BIB), et. al.
Posts: 3,300
… When someone is allotted a sign on bonus - i.e. they didn't do ANYTHING to get the points - CPAs view that the value of this is taxable..
BUT
When one charges the credit card, accumulates the points and THEN redeems the points, IRS considers that 'rebate' and not income earned, and is not taxable....
BUT
When one charges the credit card, accumulates the points and THEN redeems the points, IRS considers that 'rebate' and not income earned, and is not taxable....
If by “sign on bonus” you’re referring to what is commonly referred to as SUB (sign up bonus, new account bonus, the miles or points one receives for meeting an initial spend (charge) threshold on a new credit card), a person certainly does DO SOMETHING to obtain those miles or points. They spent the time and energy to apply and then they charge the required minimum amount to the new credit card. Those points (or miles) are just as much of a rebate as ongoing charges, just at a significantly higher rate. (If a SUB is 60,000 miles for $3000 spend (charge) in 3 months, the SUB is an earned rebate at 20 miles per $ compared to ongoing earned rebate of 1 or 2 miles per $.)
BREAK
The entire discussion of taxability is interesting due to the fact that the UR Program Agreement specifically states “Points aren’t your property and have no cash value.” It’s inappropriate to income tax an individual on something they don’t own and has no cash value. Maybe some other type of tax, similar to renting a car or hotel room, but not income tax. Maybe that’s why airline miles and hotel points are rarely (if ever) 1099ed as most programs also specifically state that an individual does not “own” the miles or points.
Apr 10, 2022, 9:11 am
#89
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,959
Moderator explanation
I moved Skytizen's post from another thread, because this thread more specifically discusses Chase's 1099 policies.
Apr 10, 2022, 9:15 am
#90
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,959
No doubt Chase's legal department thinks this is true in some sense, but UR points can be redeemed for $0,01 each, in cash, and UR points -are- taxable at that rate if received for opening a bank account or as a referral bonus. The tax status has nothing to do with "doing something" to earn them, it is specifically related to spending.