American Express

WHOA: Amex sending 1099’s for Referral Bonuses

Advertiser Disclosure: This site is part of an affiliate sales network and may receive compensation for sending traffic to partner sites. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers.

Did you miss a deal? Never again! Apply to join the members-only MilesTalk Facebook group.

MilesTalk group moderator Giancarlo alerted me to a thread that is fresh on Reddit today.

Apparently Amex is sending 1099s for the value of your referral bonuses. For example, if you received 10,000 Membership Rewards points last year for referring a friend to an Amex Gold card, you would be sent a 1099 tax form for $100, as they are valuing Membership Rewards at 1 cent per point.

This is unexpected and unusual for a few reasons.

One is that they haven’t done this before.

The second is that credit card points and miles earned from spend are not taxable. So given that and the fact it hasn’t been done before, none of us would have expected this. We’d expected it would be treated like other earned points from spend.

They are assigning various values to rewards currencies, as I call them. I find it alarming that a Redditor reports a 1cpp value for Membership Rewards (fair and reasonable to me) but a 1.25 cent value for Hilton Honors points, which I generously value at 0.5 cents.

My USPS Informed Delivery tells me I have this piece of mail waiting for me, but I don’t have it yet. I will update this post when I do as I’ve certainly referred Membership Rewards as well as old SPG, new Marriott, and possibly Hilton.

One Redditor does point out the language is in the referral offer itself :

NOTE: The value of the Referral Bonus may be taxable income to you; you are responsible for any federal or state taxes resulting from the Referral Bonus.

Many people will point out that you can adjust values in your taxes. And you can. But I don’t generally advise it as it can draw unwanted scrutiny to a return. If you want to roll the dice, Gary Leff at View from the Wing wrote about the best way to go about it a few years ago.

This isn’t even close to the first time something like this has happened. I recall vividly (and it’s probably 6 or more years ago now) when Citibank 1099ed people who got AA miles from opening a new bank account and valued the miles at a whopping 2.5 cents. I didn’t have MilesTalk back then, so I can’t link back to anything, but I remember it clear as day. I do know many did re-value that for their tax returns, though I can’t recall if Citi ultimately changed the value. (Let me know if you do!)

Amex may also revise this later, especially the crazy Hilton values, so don’t rush to file your taxes. If you work with a tax professional, I would suggest you consider filing an extension and letting this all play out over the coming months.

For those of you that have self-referred yourself to a card (i.e. you have the Amex Platinum and get yourself 15k as a referral bonus when applying yourself for another card), perhaps multiple times, or have done a great job of racking up referrals via message boards or websites, this will sting.

If you have received a 1099, or if you have one when you get hoe today, will you please comment on this thread with what you received a 1099 for so we can keep track of what Amex is valuing each point at?

If possible, please also indicate if you know if your points were earned by self-referral or for a friend, as I am curious if they may possibly be treating those differently.

Values Known So Far (thanks to all sending me data:

Amex Membership Rewards: 1 cent per point

Marriott (new): 1 cent per point

Hilton: 1.25 cents per point (newer reports say .67 cents?)

Delta: 1 cent per point

I’m not yet clear on if they are delineating between old SPG point and new Marriott points. They should be given that SPG points were worth 3x as much as current Marriott points (including those issued as SPG points after the August program merger completion.

What are your thoughts on this? Let me know here, on Twitter, or in the private MilesTalk Facebook group.

New to all of this? My “introduction to miles and points” book, MilesTalk: Live Your Wildest Travel Dreams Using Miles and Points is available now.