AMEX Sending Out 1099 Tax Forms for Referral Bonuses – Here’s What You Need to Know

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Tax season is upon us and some American Express cardholders have reported receiving 1099s for referral bonuses they’ve earned.  For example, if you referred a friend to the Hilton Honors American Express Ascend Card and got 20,000 bonus Hilton points for yourself, you might get a 1099 and have to report the value of those points on your taxes.

That’s a bummer because this hasn’t been the case in the past.  And what’s especially annoying is that AMEX has assigned a value to your points, even if you haven’t redeemed them yet.  I guess the good news is you can still take the sting out of paying your taxes by using a credit card that earns travel rewards.

Here’s what you need to know.

Keep an Eye Out for a 1099 From American Express If You Received Any Referral Bonuses This Past Year

American Express 1099 for Referral Bonuses

I have yet to receive any 1099s from AMEX, even though I earned a couple of referral bonuses last year.  So it’s worth keeping an eye out for them in the mail because other readers have already gotten theirs.

AMEX appears to be assigning a value of 1 cent per point for AMEX Membership Rewards points, Delta miles, Starwood points, and Marriott points.  And a value of 0.67 cents per point for Hilton points.  That means if you earned 80,000 Hilton points via referral bonuses last year, AMEX will send out a 1099 form for $536 in miscellaneous income (80,000 points X 0.67 cents per point).

What really irks me about this is that you’re essentially paying taxes on miscellaneous income you haven’t even “earned” if you have yet to actually use your points.  So to me, these values are a bit arbitrary.  What if I only end up redeeming my points for a value of 0.4 cents per point?

In contrast, Citi sends out 1099s for bank account bonuses after you’ve redeemed your points, so the value per point is easy to assign.  Which seems a lot more logical.

Some readers and bloggers have suggested assigning your own value to your points if you can back it up with actual redemption examples, in case of an audit.  Others have said they plan to deduct the amount of the card’s annual fee to offset the value of the miscellaneous income reported on the 1099.

Please note though, I am not a tax professional so this is not intended to be taken as tax advice.  Be sure to consult with your own personal tax professional regarding how to handle reporting any bonus points you’ve earned.

Have you received a 1099 from AMEX?  And if so, how do you plan on handling it?

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Reader
1 year ago

Should the government not tax our income until we spend it?

Jimmy Jazz
Reply to  Reader
1 year ago

The government doesn’t care if you spend your income, it is still taxable. If you make $100,000 a year and put $25,000 into a Discover bank account ( making about 2%) you will be taxed on the full $100,000 plus the $2000 you earn in interest.

A better question is whether the miles should be fully valued ( either by Amex or by the miles holder). If I earn 10,000 miles on American Airlines but don’t use them for 18 months and they expire, do I get to deduct the loss on my taxes? Sounds like the government wants it both ways. I’ll tax your miles as income but won’t let you treat it as income for loss purposes. The much, much bigger issue is whether the IRS will eventually tax ALL miles as income.

J R
Reply to  Jimmy Jazz
1 year ago

Yes, but, if I earn $100, I shouldn’t get a 1099 for $150 to be taxed on!

A reasonable valuation is what is asked for.

HH actual value is much closer to $.004 than $.007.

Jimmy Jazz
Reply to  J R
1 year ago

JR, I was replying to Reader’s comment. He stated that we shouldn’t be taxed on income we don’t spent and I explained how that is not the case.

Valuation of frequent flyer miles is s different topic.