Whenever you receive anything from a company during the year
that’s worth a total of more than $600, you may receive a
1099-MISC tax form claiming its value as “other income.” This
year, several of the major credit card issuers including
Amex and Chase
are sending these forms to card holders in response to referral
bonuses they were granted.
This in and of itself is new; these issuers haven’t regularly
sent out 1099s for referral bonuses in the past. However, Chase’s
systems in particular appear to be lumping in a wide variety of
other bonuses into the 1099 forms that some card holders have been
receiving, such as the bonus for requesting electronic statements,
and even refunds of annual fees that were waived for various
forms that Chase has sent out reportedly had wildly inaccurate
estimations of the value of the points and miles received. For
Doctor of Credit reported, Chase appears to be valuing the
500-point bonus for enrolling in paperless statements at $500 —
clearly a mistake.
I reached out to a spokesperson from Chase, who offered this
response: “We sent out some IRS Form 1099-MISCs with incorrect
dollar amounts from Chase Bank USA, NA. We apologize. We’re
double-checking our files and will send out Corrected 1099-MISCs to
affected customers as soon as we can.”
When You May Receive a 1099-MISC
The 1099-MISC form is intended to be issued when someone
receives miscellaneous taxable prizes, awards or other income
payments, among other things. Points and miles can fall under this
category, but here’s the thing: To qualify for the 1099-MISC, the
value of what you receive must exceed your costs necessary to earn
the prize or award.
For example, if you spend $10,000 on your credit card and
receive 10,000 points or miles, or even $100 in cash back, the
value of those rewards are only a small fraction of the amount you
spent, and should not be reported as taxable.
On the other hand, if you receive a $500 cash bonus just for
opening up a checking or savings account and making a deposit, then
you haven’t actually spent anything to receive your gift or
prize. In this case, the entire $500 may be considered taxable
income and you may receive a 1099-MISC form.
If there’s an obvious error, one solution is to contact the
issuer of the 1099-MISC and ask for it to be corrected.
Unfortunately, that probably won’t be something that the average
telephone customer service representative will have the authority
Thankfully, Chase recognizes that it sent out some 1099-MISC
forms in error and has pledged to send out corrected forms. In this
case, just a little a patience is probably in order.
Featured image courtesy of Shutterstock.
Source: FS – All-Travel destinations-News2
Chase Acknowledges That It Sent out Some Inaccurate 1099 Forms