Your Money Adviser: Those Credit Card Bonuses May Be Taxable

Here are some questions and answers about credit card bonuses:

Do I have to report card bonuses as income if I don’t receive a Form 1099?

You should. While the card company must send out the form for payments to an individual that total $600 or more, a bonus is considered income even if it’s below that threshold, Mr. Zidik said. “Any type of income, no matter how small, has to be reported,” he said.

How much you actually pay in taxes on the amount, however, depends on your overall income and tax bracket, Ms. Hawes said.

What if I receive a corrected 1099 form after filing my tax return?

In general, if people get a corrected 1099-MISC, they should contact their tax professional because they may need to file an amended return, Mr. Zidik said.

Does this make referring friends to get a bonus more hassle than it’s worth?

“It’s definitely a disincentive,” Mr. Riley at Mercator said. Although the amounts involved may be relatively small, he said, you still have to pay attention to forms that are filed with the I.R.S., to avoid potential penalties or interest for underreporting income.

Scott Mayerowitz, executive editorial director at The Points Guy, a website that covers card rewards topics, said having to pay taxes does take away some of the positive feelings from earning bonuses. But it’s likely that in most cases, he said, “You’re still coming out ahead.”

Ms. Rogers, of Chase, said, “Our customers love the rewards that come with our cards, and we really don’t hear concerns about tax implications.”

Article source: https://www.nytimes.com/2019/02/22/your-money/credit-card-bonuses-taxes.html?partner=rss&emc=rss