Why Does American Express Need A Copy Of My Wife's Tax Return?

Evan writes that he recently got married, and the newlyweds make more money than they did at this time last year. American Express suspects something, and has suspended their credit card, demanding a copy of his wife’s tax return from last year. What’s going on?

He writes:

AMEX abruptly suspending charging on our Gold charge card and is making my wife and I fill out a 4506-T? Our account manager is very vague as to why; and won’t accept copies of recent bank statements or pay stubs. When we filed our taxes last year we made about 48k, and our income this year has increased substantially, into the low 6 digits. Why are they doing this? Is this just a bunch of red tape before they close our account? If they compare our current spending with our “official” income last year of 48k; they probably will close the account. Sounds like a bunch of BS.

The account is one year old and we have never made a late payment.

This is crazy…why won’t they take our current paystubs as proof of income? My wife and I weren’t married in ’09; so they just want her income tax return; our income now is significantly higher.

Some key information is missing here: is he carrying a balance on the card, or paying it off every month? Is he using the card more, spending more money along with his increased income?

We passed Evan’s e-mail along to someone at American Express, and hope to post an update soon.

Comments

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  1. SNForrester says:

    If AmEx doesn’t want your business, why not just get a new card from another company? Is there a shortage of credit cards I’m not aware of?

    • dbeahn says:

      Yes, this. Every time I see one of these “Credit Card Company is treating me WRONG” posts I have to wonder what’s going on that the OP doesn’t just pay it off and walk away.

      • alaron says:

        Because the way credit works is that a long history is better than a shorter one.

      • apd09 says:

        but their credit score will take a hit because of the closing of the account and opening of a new one, not to mention the loss of credit history if that is their longest opened account.

        Again the myth of the credit score blinds people to reality. Unless you are planning on needing to apply for credit in the next 6 months or so, don’t worry about the short term effect of getting a new credit card or closing another one. Not too mention the issue of tiers and that there is no difference between 760 or 720, that is just a guess since no one really knows what scores equate to what tiers because they seem to be changing all the time.

        • Talisker says:

          You should check out a website called http:/www.consumerist.com. They had an article a little while ago that closing credits cards really doesn’t have the dire effect on credit scores that the credit card companies would have you believe.

      • Gulliver says:

        If AMEX were treating him wrong you might have a point. I am sure a red flag is put up when spending goes above certain threshold based on what past income was. The first thing I thought of was possible money laundering, which Amex and all banks and/or credit cards would be required to have some set up to stop. Imagine the increased income was from selling drugs. He uses the AMex money to pay all his bills and uses that cash run through his bank to pay AMEX each and every month. The other HUGE issue in this, is the card is a year old. It may be perfectly legitimate, but over 100% increase in income in one year says something COULD be going on.
        You would blame AMEX if it turned out the guy was doing something illegal and the post would be, how could a company the size of AMEX not realize this guy was gaming the system.

      • trentblase says:

        Maybe because he buys a ton of stuff at Costco?

        • Miss Dev (The Beer Sherpa) says:

          That was my exact thought.

          That is the only reason anyone in my family has an AMEX: so we can buy gas at Costco (we pay for actual goods with cash or check).

    • Mythandros says:

      I fail to see how this helps the OP. Troll much?

      The OP wants a solution to his CURRENT problem, with his CURRENT company. Telling him to change companies is like telling me to buy a new car when my car breaks down. It’s not a solution, it’s a waste of my time.

      If you’re going to post, at least offer SOMETHING productive in your post, otherwise it’s just trolling, get it?

      Obvious troll is obvious.

    • spamtasticus says:

      Cash is king!

  2. Gulliver says:

    I am guessing they need to see that you are actually making the money and claiming it, and not laundering money through the AMEX account. By the OP’s own admission their income has jumped over 100% in less then a year in an account opened less than a year. If you were involved in illegal activities it would be a way to move money around. Imagine being AMEX and seeing this guys income was $48k last year, he now has charged $50k AND is still making payments. If you want to keep the card, do what they ask

    • humphrmi says:

      Yep, I’m pretty sure they’re looking at fairly standard warning signs and vetting the account for possible money laundering, as required by law. Which is also why they’re not saying much to the OP right now.

    • Nidoking says:

      And how will providing documents completely unrelated to the increase in income help? Last year’s tax return won’t show the increased income for THIS year.

      • Eyeheartpie says:

        OP claims he got married. By seeing new wife’s income tax return from last year, they can confirm that her claimed income + his claimed income coincides with his new spending habits. If it doesn’t, then they are spending more than they should be able to.

      • Gulliver says:

        I mispoke, if you want a conforming loan you MUST provide this documentation. A W2 is not your tax return and means nothing. Non-conforming loans are those that generally carry a higher interest rate, not backed by Freddie or Fannie, and have such names as NO DOC, or LIMITED DOC. These are also loans which allowed people with 500 credit scores and $25k a year income to get $500k homes. These were popular for those that funneled business money into their personal life (they would use a % of the revenue from the business to determine ability to pay), or were willing to commit fraud to get a loan they could not afford.If your mortgage person is putting you in this type of loan RUN. If your house is being built, you are probably working off construction or bridge loans, and you do not have a mortgage on the property yet. Once it is finished all the loans are rolled into the mortgage, which is a separate loan.

  3. Geekybiker says:

    They are deciding if you make enough to be worth keeping as a customer? Maybe they pulled your credit and saw a drop and want to make sure they don’t get shafted.

  4. Invalid_User_Name says:

    First, I don’t think American Express is “making” the OP complete this form. AmEx is “requesting” that they do so.

    Second, tell AmEx to drop dead. If they want verification of additional income, you already provided. Tax returns, please. KMA.

    • redskull says:

      Suspending the account unless they send the info sure sounds like “making” to me.

      • aja175 says:

        They can decline this request and close the account if they want, they aren’t being forced to do anything.

        • MMD says:

          If they don’t comply, they’re in essence being forced to get a new credit card. Last time I had to get a new credit card (a replacement card from when I lost my wallet), I had the added delight of changing my information for everything that autobills to that account. Why should AmEx have the right to cause this sort of inconvenience? And if it’s truly necessary, why can’t they explain their reasoning?

  5. unsunder says:

    It’s a charge card so I doubt there’s a balance.

  6. EcPercy says:

    I am with the others here. If you must have a credit card and they start asking for something that sounds ridiculous why not just take your business elsewhere?

  7. hills says:

    Maybe the combo of the acct being just 1 year old + new marriage triggered something requiring amex to verify income? My husband & I have been with amex for 10 years and a year ago our income increased 8x – so it was a significant jump – and we increased our credit line without any problems just by telling them our new income. We never carry a balance though, so maybe that’s why they didn’t request documentation…?

  8. pecan 3.14159265 says:

    I have no context for any of this. How AmEx was in a position to know that the OP and his wife have more income this year than they did last year…I mean, I have no idea what would bring about this kind of discussion at all. When I got married I didn’t notify any of my credit card companies, except to change my name.

    The post reads “AmEx suspending their credit card” (emphasis is mine) implying they have a joint card – okay, but what does that have anything to do with how much income you make?

  9. goldilockz says:

    If you make 6 figures, why are you using a credit card? Sounds like you don’t need them anymore.

    • katarzyna says:

      Really?

    • Murph1908 says:

      This statement is wrong on so many levels.

    • Bunnies Attack! says:

      I hope you’re confusing 6 figures with 6 zeroes…

    • Mom says:

      Wads of cash in my pants pockets makes my butt look big.

    • Crunchbones says:

      I can tell that there is a fundamental problem with the way that you view credit. You might want to work on that.

      This isn’t even a credit card, it’s a charge card, and a “low six digit” income means absolutely with regards to his ability to pay for things. How do you know the cost of living in his area? How do you know his expenses?

    • TheGreySpectre says:

      I can’t decide if you’re trolling or legitimately have no concept of money, wealth or credit.

      Assuming the 2nd at risk of being trolled; 100k really isn’t that much money, especially in a household with two income sources, especially in big cities like New York. Credit cards offer consumer protections and convenience, you know how we often advocate chargebacks here on consumerist, you can’t do those if you pay for everything in cash.

      • infromsea says:

        Actually,

        Goldi’s comment makes perfect sense (I know I’m late to this conversation but the ignorance in your comment lured me in).

        I live in a six figure household. We spend cash/debit on everything, even a home remodel.

        No one gets rich using charge cards. They have nothing to do with wealth. Your are confusing time periods. 20 years ago, only the rich could get them and it may have indicated a higher income. We all know that is not the case now, just check any college campus to see how many broke students carry them.

        FICO scores and gold cards do not indicate wealth, that little thing called net worth, it does.

    • Peacock (Now In Extra Crispy) says:

      I make my own cash at home.

    • Trick says:

      I would ask that you do know the difference between a credit card and a charge card but then again, re-reading your message makes me think you didn’t even bother to read the OP’s story or just have a hard time comprehending what you read.

  10. bsh0544 says:

    I am confused. Why does Amex care about his income? As long as he makes his payments on time and doesn’t go over his limit, it’s not really their business how much he makes.

    • Gulliver says:

      This is a charge card, not a credit card. Amex DOES care about the income. Charge cards musst be paid off every month. At one point he made $48k, I be now he is charging a substantially higher amount than he did only a year agoo, and paying it off. On an acccount opeened for a year, that wwould signal every red flag in the world.

      • bsh0544 says:

        Red flag for what though? Others have indicated money laundering, which I suppose is possible. It just seems odd.

        • quasijo says:

          The first red flag I think of is that he might be on a spending spree before filing for bankruptcy. Having debtors become insolvent is bad for shareholder value.

  11. evilpete says:

    I refuse to use AMEX after they misprocessed my payments twice, cashing a $5k payment as $500 then suspending my cards & forcing me to pay late fees for their error.

  12. cottercutie says:

    AMEX is notorious for this, it’s called a Financial Review. They do them at random to both new and old customers alike, on their charge products and their credit cards..with no rhyme or reason. If you google it, you will find numerous threads on forums like Creditboards, Fatwallet etc

    • TasteyCat says:

      +1. Common practice from Amex. Most companies get whatever information they need when you apply and keep tabs on you through soft inquiries. Amex, however, requests more information than you’ll need to give for a mortgage at their whim, and will suspend your account unless/until you comply.

      Personally, I’d close the account and get a real credit card from a company that cares about its customers.

  13. Gulliver says:

    Why would this be considered bad? Isn’t this what they should be doing all along. Finding out the worthiness of their customers before extending terms to them? I think this information should be required to grant ANYBODY credit or charge terms. Imagine a guy with $25k limit, suddenly loses his job. He decides to live off his cards, until time runs out, he doesn’t find a new job, and suddenly the company is stuck with a bad debt. If they had the opportunity to reduce his available funds the company would not be out as much, and would not have required bailouts. Funny how that works. Wen you want a mortgage, they do not accept only your pay stubs, or bank statements. They want tax returns too. Many businesses, legal or illegal can funnel money through their bank accounts, bt not declare taxes. I could be self-employed and put any amount I want as a paycheck, but the number you give the IRS is supposed to be a true indicator of your net income.

    • brianw76 says:

      You are wrong. We are building a new 4600 sq/ft house and nowhere along the process were we ever requested to give them our W2s. We did have to provide paystubs, bank statements, and statements for any accounts that we wanted them to take into consideration for our loan, but that’s it.

      Also, your logic is flawed in your other argument. If somebody loses their job in January and the credit card is requesting the previous year’s W2, it would be much easier to game the system by showing a proof of income that is no longer valid. A current paystub should be plenty for proof of current pay rate as well as showing you still have a job.

      • benson304 says:

        He’s not wrong, you ever think that maybe different mortgage brokers and banks would request different things? I had to provide my tax returns to both banks I dealt with, but the mortgage broker was just fine with paystubs.

        There’s a reason that mortgage brokers are considered some of the slimiest people around, they’ll do anything to get you. I just got an email today, unsolicited, from the mortgage broker that gave me a quick pre-approval before I bought my condo last year, asking me to refinance. I didn’t even use her to get my mortgage, she should not have maintained my email address without my permission.

      • Gulliver says:

        I mispoke, if you want a conforming loan you MUST provide this documentation. A W2 is not your tax return and means nothing. Non-conforming loans are those that generally carry a higher interest rate, not backed by Freddie or Fannie, and have such names as NO DOC, or LIMITED DOC. These are also loans which allowed people with 500 credit scores and $25k a year income to get $500k homes. These were popular for those that funneled business money into their personal life (they would use a % of the revenue from the business to determine ability to pay), or were willing to commit fraud to get a loan they could not afford.If your mortgage person is putting you in this type of loan RUN. If your house is being built, you are probably working off construction or bridge loans, and you do not have a mortgage on the property yet. Once it is finished all the loans are rolled into the mortgage, which is a separate loan.

    • RandomHookup says:

      The only time I’ve been asked for tax returns is for a mortgage (which is probably 10x the amount of a charge card credit limit). Seems like a bit much considering the OP offered paystubs as substitute.

    • peebozi says:

      I thought that was the reason for charging usurious interest rates, no?

      and, for your corporate overlords, shouldn’t they have requested this info before extending him $1 in credit, if that’s their lying position.

      Amex just got stuck for $60,000 by a bankrupt (financially, not morally like banks) friend of mine…LOL, i loved hearing that one.

      i know $60,000 ‘s not going to effect their bottom line like say, the federal government not giving them free money, but it’s nice to see every once in a while.

    • TasteyCat says:

      Amex has already extended credit terms to him. Now they’re doing a review (an invasive one) after the fact.

  14. mijo_sq says:

    I have had to go through this procedure twice so far. They are verifying the ratio of income to spending. If your income is low, then they will close your account.

    I purchased my wedding ring and asked amex to process the payment. In about two weeks later, they asked me to fax in a copy of my tax return. They closed my account within 1 week.

    But they don’t limit to just personal, if you have any other amex accounts you’re linked to then those accounts will be subject to verification too. Amex requested documents from my company and my brother. My company didn’t budge, so amex cancelled theirs too.

  15. msky says:

    I think its pretty easy to see why they are requesting that. According to ‘know your customer’ rule, a financial institution has a responsibility to report any inconsistencies with the accounting of their customers. A jump in earnings from 48000 to low 100000 would certainly constitute that.

    • guymandude says:

      So then, I should be able to request the SSN’s and bank account statements of AmEx’s principles in order to determine they’re not involved with any fraudulent or criminal activity(such as money laundering)… yes?

      • msky says:

        @guymandude = no. They are not your customers. They do not fall under ‘know your customer’ rule in this case. You could find all that info on the interweb anyway.

        @OutPastPluto = common. Be reasonable. Its more than 100%. If you were in their place you would be suspisios as well.

    • OutPastPluto says:

      A jump between 48K and 100K is not really that spectacular. A lot of people can manage that on their own by simply moving between a crappy job and a good one. The crappy job doesn’t even have to be something you are overqualified for. Compensation can very wildly in some jobs even without getting into relocation. This is a crap economy. Someone could easily be “settling” or underemployed.

  16. chopbrocoli says:

    OP has been subjected to the notorious “Financial Review.” I was once FR’d 3 yrs ago and passed. But then a year later, they did another financial review on me again. At that point, I closed my platinum charge account with them. If I were you, I would immediately transfer your Membership Reward points or Redeem them now! Good luck

  17. energynotsaved says:

    When I divorced, my old Amx-Costco card was in the ex’s name. I tried to get a new one, but they wouldn’t give me one because “I had one”. Except, I didn’t have it. I closed my section of the card, dumped my Costco membership, and opened a cash-back Discover card. I join the chorus in urging the poster to use his points or other bonus items and close the account. It isn’t worth it.

  18. StB says:

    My guess is the amount of spending has jumped on the card. The are comparing the information on file (what you told them your job and income was) to the amount of the charges that are being posted. Something triggered to suggest there might be suspicious activity. They are doing their job in accordance with anti-money laundering laws.

  19. evnmorlo says:

    If the credit limit was based on 48k any audit shouldn’t be a problem. It might have been triggered by the increased spending, but Amex is just concerned that you have lost your job and are maxing out cards before going bankrupt.

    • evnmorlo says:

      Now that I see that it is a no-limit charge card paid in full each month, I don’t see what Amex’s problem is…

  20. iMaNcOoL says:

    Funny thing- I’ve had a Gold AMEX for about 2 years. After about a year, I requested a credit line increase in advance of a vacation to Europe. They mailed me a form asking me to authorize the IRS to release a copy of my tax return to them. I was not very happy about having to disclose that information, so I just ignored and shredded the letter. A month later I get a notice notifying me that my credit line increase was approved, to the level that I originally requested.

    *shrugs*

  21. kobresia says:

    Seems pretty obvious to me why they’re concerned.

    Probable factors that motivate this are:

    1) Increased spending on the card, possibly because wife is on the account and using it too.
    2) Credit rating & history
    3) Revolving balance carried on the account

    I will say that I’ve been an AmEx cardholder for over 10 years. I’ve carried large revolving balances on occasion,and I’ve let the cards sit idle for several months at others. I’m going to say that I think they’re the best credit card issuer I’ve had an account with.

    Why? Primarily because they seem genuine and professional. Their interest rates (aside from the introductory promotions) are not the best, but they’re not ludicrous either. They don’t incessantly beg me to go into debt with them. They just behave like a prime issuer for prime customers.

    If there’s one thing I’ve noticed about BoA (who has at this point bought-up all but two of my Visa/MC issuers, most notably MBNA), it’s that they seem to be a sub-par financial services company who thrives on sub-prime credit accounts, where they strive to get non-savvy consumers into debt, and then abuse them in unspeakable ways.

    In short, if you feel you’re a prime credit consumer and want a prime credit issuer, you probably will have to demonstrate you’re still creditworthy to them. If you value just having easy credit regardless of cost, go sub-prime; even your dog is creditworthy as far as they’re concerned, but they’re just waiting for you to make even the slightest slip-up or non-fiscally-savvy decision, at which point the a$$-raping will commence.

    • sybann says:

      This. I only have AmEx – except for my damn bank card which is Visa. These people are professional in every respect – and I have had to suffer through one of their financial reviews and they were very firm, but polite. I was pissed but got over it because they are always there for me when/if I have a concern or need to dispute a charge.

    • sybann says:

      This. I only have AmEx – except for my damn bank card which is Visa. These people are professional in every respect – and I have had to suffer through one of their financial reviews and they were very firm, but polite. I was pissed but got over it because they are always there for me when/if I have a concern or need to dispute a charge.

    • sybann says:

      This. I only have AmEx – except for my damn bank card which is Visa. These people are professional in every respect – and I have had to suffer through one of their financial reviews and they were very firm, but polite. I was pissed but got over it because they are always there for me when/if I have a concern or need to dispute a charge.

    • Putaro says:

      I had an Amex Gold card for about 20 years and I used to think they were a good company to deal with. I’m outside of the country most of the time and my mail gets forwarded to me. I hadn’t been using my Amex and I missed paying the yearly fee. I caught it a couple of statements later and there was a note that if I didn’t pay immediately they would close the account. I did pay immediately, for all of the fees plus late fees. The next statement that arrived showed a positive balance so I assumed that they had refunded the late fees since I had been a customer for 20 years. I went to use my card and was told by the merchant (after the card was declined and they called Amex) that the account had been closed. I called Amex, spoke to a very rude lady who informed me that they had decided to just close the account.

      I will NEVER do business with Amex again. Not only did they close the account before they said they would but they did not notify me that they were closing the account (I checked the statement with the positive balance closely and there is no mention on there that the account was being closed) causing me to be embarrassed. A 20 year relationship out the window over $75 a couple of months late. Good job Amex.

  22. sybann says:

    This. I only have AmEx – except for my damn bank card which is Visa. These people are professional in every respect – and I have had to suffer through one of their financial reviews and they were very firm, but polite. I was pissed but got over it because they are always there for me when/if I have a concern or need to dispute a charge.

  23. capnike says:

    Amex has been the center of investigations concerning ‘money laundering’ on cards where large balances are paid every month.
    While there is the croud out there who says ‘so what as long as the balance is paid’ – Amex cares adn has to live by the Federal guidlines on money laundering rules. Basically you cant use an Amex to get around them.
    They are clumsy in their approach to getting the paperwork they need, BUT if you want to keep you rAMex, find a way to comply.

  24. Shinumo says:

    If you live in a community property state, then your income is joined as well as your debt. So if you charge a new stereo on the card, and then you get divorced, she is as responsible for that debt as you are. So she is essentially applying for an AMEX card. And they are checking everything they check for any applicant.

    • Invalid_User_Name says:

      That’s not completely accurate. A creditor cannot go after her if her name was never on the debt to begin with.

  25. krom says:

    Man, what the hell is a two person family making 48k doing with an Amex? I make 10% more than that on my own and only barely have started considering an Amex as being a worthwhile idea. Seriously, it’s like having a $2,000 flatscreen and complaining you don’t have enough money for food.

  26. zantafio says:

    This is not new, AMex asked for my tax return back in fall 2005. I refused to comply, they closed the account (a charge card).

  27. dougp26364 says:

    There is no credit card on the planet that’s worth this sort of hassle. If AE is suspicious of someone and suspends their account, then go the extra step, payoff the account, close the account and get a different card. I’ve closed more than one account in my lifetime due to what I felt was inappropriate behavior from the issuing bank.

    If you’re doing something that you know isn’t right and has drawn the attention of the CC company, good for them for being suspicious, checking up on the account and taking action before things get out of hand.

  28. robotprom says:

    I had to fill one out when we asked for a CLI on our Amex Blue. Amex is very thorough about verifying your ability to pay.

  29. OutPastPluto says:

    American Express engaged in a rash of credit line decreases a few months ago. It’s the sort of thing that could really send your credit rating into a tailspin as all of your credit utilization numbers suddenly become horrible. This sounds like another variation on that.

    You almost wonder if it’s intentional corporate espionage/sabotage.

  30. sreti says:

    Damned it you do, damned if you don’t. My guess is that this http://milwaukee.bizjournals.com/milwaukee/stories/2010/10/04/story3.html?b=1286164800^4024631 is why Amex is asking for this info. Your spending probably jumped significantly which makes it look like possible fraud

  31. TTFK says:

    Yet another recipient of the Amex Butt Pinch.

  32. Winteridge2 says:

    Whatever Amex’s reason is for wanting to review your tax return, unless, in the great American Way, you have amassed a huge balance, I would send them their card and find a new lender. Ask their rep if you can see HIS tax return.

  33. NumberSix says:

    “he recently got married…”

    Well there’s yer problem.