NEW YORK—As tax season arrives, some consumers may find they owe money for a credit card perk. If cardholders have received a bonus from their credit card company for successfully referring friends or family for new cards, they may owe taxes on that bonus.
“People who thought they were getting a perk with no strings attached are getting 1099 tax forms from some major card brands, including Chase, American Express and Discover,” reported the New York Times.
Whether rewards or bonuses are taxable depends on whether they are tied to spending on the card, the Times explained.
“If you get cash back or rewards from a credit card in exchange for buying things with the card, the Internal Revenue Service generally doesn't consider the rewards taxable. If you earn a reward or bonus for simply opening an account—or referring a friend who opens a new account—that amount is considered to be taxable, the Times said.