Most people earn credit card rewards or use built-in statement credits on their credit cards to save money … not rack up a bigger tax bill.<\/p>\n
Unfortunately, it seems some Capital One cardholders are receiving unexpected 1099s for using some of their credit card perks \u2014 such as statement credits available for application fees on programs like Global Entry.<\/p>\n
A U.S. Tax Court ruling from 2021<\/a> says that earning points or rebates from a credit card isn’t considered income, so what’s happening here? Why is Capital One sending out 1099 forms, which are typically used to report income for tax purposes?<\/p>\n Normally, there are some cases where you might receive a 1099 form for bank account sign-up bonuses, bonuses for referring a friend to a credit card or for buying cash equivalents like gift cards and money orders.<\/p>\n For example, TPG reader Kevin Banh got one for referrals he made to others. “I referred 2 for CapOne (50k miles) but didn’t get any forms in 2022 for 2021. But referred 4 (100k miles) and got a form this year,” Banh said. That’s pretty standard since referral bonuses are considered income instead of a rebate on spending.<\/p>\n The same applies to opening a Bask Bank Mileage Savings Account<\/a> to earn American Airlines AAdvantage miles. The rewards you’ll earn are considered interest income. So, you’ll receive a 1099 form as these are also not seen as rebates on spending, which are generally not taxable.<\/p>\n
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