Capital One Sending 1099s Forms That Include The Value Of Statement Credits
I receive compensation for content and many links on this blog. Citibank is an advertising partner of this site, as is American Express, Chase, Barclays and Capital One. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available — instead focusing on miles, points, and cash back (and currencies that can be converted into the same). Terms apply to the offers and benefits listed on this page.
A reader shared with me that they received an IRS 1099 form from their use of a Capital One credit card and was trying to make sense of it.
He spoke with several people at Capital One, and came away realizing that this was triggered because he had received more than $600 in ‘income’ from them in the form of statement credits, goodwill points, and referral bonuses. For instance, he’d gotten 10,000 points as an apology when their system to transfer points to miles wasn’t working, and referred three or four friends to get the card.
What was odd is that he reported that statement credits were included in his 1099 amount. So I reached out to Capital One to understand this better.
- Referral bonuses are income. That makes sense to me. You’re basically being paid to market the card to your friends.
- Statement credits, though, are rebates which isn’t usually taxable.
- And I’ve never had a bank report apology points compensating me for a loss or disservice.
A Capital One spokesperson shared,
Required reportable payments include certain credits or gifts given to customers including the TSA Pre/Global Entry statement credit and courtesy credits via customer servicing; reportable payments must equal or exceed a total of $600 within a year for a customer to be eligible to receive the 1099-MISC form.
Capital One isn’t actually telling you what is taxable. They are telling the IRS what they gave you. And their lawyers seem to think this is required, even though it’s more aggressive reporting than I’ve seen by major banks in the industry.
When you receive something that’s taxable, you need to include it on your income tax filing whether you receive a 1099 or not. Whether or not you receive a 1099 form isn’t actually relevant to your tax liability!
And just because you receive a 1099 form for something doesn’t make it taxable, either. The 1099 tells the IRS that you’ve received something from a business, and it tells you the business has told the IRS about it. 1099s can be wrong! And you can dispute them.
In any case, Capital One’s position that TSA PreCheck or Global Entry statement credits need to be included in 1099 reporting, when you’ve received enough other benefits from them to trigger a 1099 ($600+ in a year), is unique in the industry as far as I am aware. Nonetheless, their decision to tell the IRS about it isn’t what makes it taxable. It either is or it isn’t. But most folks wouldn’t think to report this on their taxes without it being included in a 1099, and wouldn’t dispute it whether or not it’s taxable once it’s reported.
Fortunately most Capital One customers do not receive $600 or more in a calendar year in credits from the bank (including referral credits, apology points), and thus won’t face this issue. Just receive a travel credit and a Global Entry statement credit? You’ll be below the reporting threshold.
GIPHY App Key not set. Please check settings