Question

1099-MISC For Value of Chase/Marriott Spend Incentive Bonus

Forum|Forum|2 years ago
February 8, 2024
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I signed up for a Chase Marriott Boundless credit card in 2023 that offered three Marriott Certificates valued at up to 50,000 Marriott Points each in exchange for spending $3,000 on the card in the first three months. Last week, I received a 1099-MISC for about $460, which appears to be Chase's established value for those certificates. I have two questions.

1) My understanding is that those points certificates should NOT be taxable because they were in exchange for spending $3K, and thus are viewed by the IRS as a rebate on that $3K in purchases rather than as income -- just like a straight points bonus or a cash back bonus contingent on spending a certain amount of money on the credit card. I understand that free points/bonuses that are NOT for consideration (ie just for opening the account, or referral bonuses) are taxable, but that is not my situation: this was in exchange for spend. Is this correct? If so, I'd love a source saying it shouldn't be taxable; and if not, I'd love to know how/why I'm wrong.

2) If my understanding is correct, how should I proceed? The only thing I can think to do to avoid paying tax on this (non)income would be to declare it as normal when I file, but then add a line in Other Income as a negative of the same amount shown on the 1099-MISC, with an explanation (ie that it's a rebate). Would that satisfy the IRS, and if so, how do I do this in TurboTax? Is there a better way?

Thanks all.

O

Opus 17

Employee

The ongoing cash back bonus (1%, 2% of purchases, etc.) is a discount or rebate of the merchant fee charged to merchants by the bank, and is not taxable. The initial signup bonus is generally considered taxable. This Forbes article seems to get it right on both sides.

https://www.forbes.com/advisor/credit-cards/are-credit-card-rewards-taxable/

V

VaapadAuthor

By the text of this very article, it appears that I am correct. See the last sentence in this excerpt: "This also applies to welcome bonuses received for opening a new credit card since customers generally have to spend a certain amount of money ... to receive a bonus." (my emphasis).