View Full Version : Will I have to pay taxes on my winnings? Tax questions & Answers here
August 31st, 2002, 2:59pm
Hi! I am new to the online sweeps and I have a question for ya all that have won.
What is the tax on prizes? If you win a $20.00 do you know if the tax rules are the same for grand prizes $$$ ?
My sister tells me- it's like 40% of the prize but I don't trust her tax info (she has 3 brain cells & 2 are on vacation) and she is not good with math. (it's okay we are sisters and if you cant make fun of your family who can you make fun of?ha,ha.)
Whoops I'm rambeling..must keep fingers from getting tired,must enter more contests, If you know this tax stuff please let me know ?
Thanks for helping me.
I am totaly addicted to Online-Sweepstakes!
August 31st, 2002, 8:14pm
I'm no tax expert, but I think that the ARV of your prize is taxed as income. In other words, the tax rate varies according to your income (including wins), and you shouldn't enter any sweeps for things that you wouldn't spend the money on if you had it. My brother won $50,000 last spring and this information comes from him. Personally, I'm still waiting to win something in order to verify this.
August 31st, 2002, 8:34pm
Here are a few links to threads along the whole tax topic:) Happy reading!
Hope those help some - there are quite a few threads on it so hopefully something will make sense - like your sister I despise math:)
September 3rd, 2002, 4:37pm
You will be taxed usually after $600 for the full amount.
You will be taxed as earned income. That is why I rarely enter vacations unless they come with some money to pay taxes.
You will receive a 1099 at the end of the year for your prizes usually over $600.I have won many big items and money and this is how it worked for me.
September 4th, 2002, 12:18am
It is taxed as income and according to what tax bracket that you fall under...and believe me, it hurts. Man, does it hurt.
September 4th, 2002, 10:01am
Just because you win something valued at under $600 in no way means you don't have to report it to the IRS. In other words: you still have to report it by law but if you don't the IRS will probably never know. There's a huge difference between something being "right" and simply not being caught.
Furthermore, the IRS definitely wants every tax dollar and cent rightfully due - regardless of whether or not you want to pay or think you can get away with not telling the full truth. "Every little win" does add up, and I for one enjoy the many things tax dollars buy our country including military protection, FBI and counter terrorism.
The IRS underscores this by offering cash rewards to people who turn in individuals and businesses who underreport their income for tax purposes.
September 4th, 2002, 4:32pm
Politics aside, my information is that Gomez is right. 1099's are generated usually upon $600+ earned/won. However, the taxing deal is not just which winnings meant you were issued a 1099, but what you won/earned overall. (this is not meant to be preachy, just my reading of other sites that discuss this issue)
Maybe analogous to a waiters' tips not being trackable via a 1099 - however tips are still meant to be reported, as are winnings.
September 4th, 2002, 8:51pm
According to the IRS, prizes are taxed at 27% of their fair market value. No ifs, ands or buts. Fair Market value is not the ARV of the prize.. it's what you would have paid for the prize if you had bought it yourself. Therefore, you should keep a record (or records) of what something costs at the time you win it. Visit websites, visit stores, and find out how much you would have paid for the exact same thing.
If there is a huge conflict between ARV and FMV, it's best to contact the sponsor to see if you can get a 1099 for a lesser amount. That way, you don't throw up red flags. But.. as long as you have the documents, ads, or other proof of FMV, you should be okay.
Most sweepstakers do not claim the t-shirts, basketballs, and other little prizes. According to the IRS, we are supposed to claim these things, but most of us spend (either in time or money) way more than the value of these prizes, so we write them off.
Most likely, you will not receive a 1099 for a prize worth under $600, but that's only because the sponsors are not required to submit a 1099 for prizes under that amount. It IS still taxable income, however.
September 27th, 2002, 5:44pm
The Company will send you a 1099 form at the end of the year.
You have to treat it as income !:nay:
September 27th, 2002, 6:47pm
But if you can find a similar package offered for less money, or arrange with a travel agent the same trip at a lower cost, then you can claim the lesser amount for tax purposes.
Try doing a search of the forums (you'll find the search button on the top far right of the screen) for the word taxes. I am sure you will find lots of helpful hints that way!
Congrats again on your trip!
October 27th, 2002, 9:05am
Hello everyone, I'm new to the sweepstakes forum. I've only been entering sweeps for a week. My question is on taxes. How soon do you have to pay taxes on prizes and what happens if you don't have the money to pay for the taxes at that time? Just wanted to know. If you have any other advice for an amateur than please let me know. Best of luck to everyone.
October 27th, 2002, 9:35am
you will have to declare you wins as earned income when you file your tax return at the end of the year. You will have to pay 30% of the value of your prize. If you win a car you will have to pay the sells tax and licence fee when you pick up your car. And the 30% earned income at the end of the year. Hope this helps
October 27th, 2002, 12:47pm
Is there taxes on everything you win? For example a pencil or a GC or a t shirt? Do you have to pay taxes on small prizes like those too? I mean i dont think you would have to pay taxes on things that are only 1 dollar or 2. Am I right?
October 27th, 2002, 1:19pm
Consult your tax advisor...let your own conscience be your guide.
Basically, for most prizes valued at $600 or higher, the sponsor will issue a 1099, so that will be reported to the IRS. The affadavit / validation process includes your acknowledging this and providing your Social Security number. Sometimes they will do this for prizes valued at lesser amounts. Sometimes they won't do it period.
Technically, my understanding is that taxpayers are supposed to report everything of value with they receive and which could therefore be construed as taxable income. So ostensibly (really pushing it here) the IRS could visit your "Winners Brag Page" and add up all the tshirts and pencil grippers, LOL.
Any CPA's here, or folks who have been audited are invited to chime in!
I've also heard, somewhere...don't remember where, that promotional stuff...items that have a Company's logo on them (like gimmee hats or tshirts) are considered advertising for the company, and NOT items of value with respect to the recipient's tax obligations. I know I'm certainly not gonna report my American Pie II tshirt, etc. as $14 of income...LOL.
October 27th, 2002, 2:09pm
The way i understand it is if you win a prize worth more than $600 or if you win a bunch of prizes that total up to more than $600 you must report it. If your total winnings are less than $600 you don't.
On a side note: If you play the lottery and win more than $600 you can lower the amount of taxes you have to pay by showing your non-winning tickets. Let's say you win $1000 but you have $700 in non-winning tickets. They subtract 700 from 1000 = 300 and you only have to pay taxes on $300. Ever wonder why they ask you if you want to keep your non-winning tickets when you check your numbers at the store? That's why. I suppose you could do the same thing with sweepstaking, saving your reciepts for stamps and such.
October 27th, 2002, 2:11pm
Oh so let me get this straight, anything over the value of $ 600 will be considered as tax. So if you have won a shirt like your PIE tshirt that wont be considered as tax?
October 27th, 2002, 2:27pm
I thought you could only deduct gambling expenses if you consider yourself a "professional" gambler? Any other source of income would prevail and you would not be eligible for that status. Otherwise, why not just pick up discarded lottery tickets/window bet slips (at the track) off the street, claim them as your expense over and above your winnings (and provide a public service at the same time), and never have to pay taxes on your lottery/gambling winnings?
Just like you are suppose to claim and pay taxes on any income from any source, including illegal active (drug sales, stolen property profit, etc. ) I remember a case not too long ago where they caught a drug smuggler and also charged him with tax evasion for not claiming the income on his tax returns! LOL
October 27th, 2002, 3:31pm
Here's what I know about the subject...
You can definitely claim gambling losses against any taxable gambling wins on your taxes. Whether professionial gambler or not. This I know for sure- as long as you have a win loss statement provided by the casino. As for lottery tickets- a friend- NOT ME- has dug through many a mini mart trash can for losing tickets.
The tax laws governing sweeps are much less straight foreward since I'm guessing this is not a very popular hobby (yet) and the questions don't come up as often. But from my understanding anything over $599 as one prize ( whether it be a lot of smaller prizes included in 1 prize or just 1 thing) should be reported as income on your taxes. You can deduct your stamps, 3x5 cards ect. If you are a gambler you could try deducting your internet service and computer if you use it solely for sweepstaking. But like I said very iffy. Again to be clear you can only deduct these things against a taxable sweeps win. But I am pretty sure that you don't necessarily have to pay 30% on taxable wins. They simply get added to your income for that year and you pay the taxes on that figure. So if you are not going to be put into a higher tax bracket for the win you could wind up paying much less than 30% on that win. But again not 100% on that. My best advice if you have a big win in a year get your taxes done by a pro- or call the IRS to have all ?'s answered.
October 28th, 2002, 10:43am
The only way you can deduct your expenses is if you Itemize.
and yes, the government wants to know EVERYTHING you won.
November 3rd, 2002, 4:53pm
I copied this from Publication 17 of the IRS:
"Prizes and awards. If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on line 21 of Form 1040. If you refuse to accept a prize, do not include its value in your income.
Prizes and awards in goods or services must be included in your income at their fair market value. "
November 3rd, 2002, 11:45pm
thank you all for all your replies but lady bug ur example states a prize that is 50 dollars. so wait i must put my pencil win on the list too? Is there a specific amount i mean how will they tax on a pencil that is 1 dollar. and what if you cant REFUSE a win?
November 4th, 2002, 7:19am
Actually, that's not my example. It's the actual example in Publication 17. I think you should definately let your conscience be your guide. Are they going to know you received a pencil as a prize? No. Like you said, it's worth about a dollar. I've won a ton of door prizes in my life worth a few dollars and never even considered paying taxes on them. But when we begin sweeping, we get a lot more conscious of the wins. You should probably come up with a plan for when you will report prizes on your taxes. For some people, it might be if the prize is more than $50 (per the example), for others with a pricked conscience it might be $5. Totally up to you.
Oh, and you mentioned times when you couldn't refuse a prize. I'm assuming you mean when it shows up at your door. You could always donate it to charity if you didn't feel like paying taxes on it. Otherwise, you have to list the fair market value of the prize. Again, based on the amount you've decided to report.
Hope this helps. :cool:
November 5th, 2002, 11:54am
Hi. Can anyone tell me more about paying taxes on the prize one has won? I received an email that I won a trip. It includes lodging, meals, and sightseeing, etc. I'm excited, but I have no clue as to how much to pay for taxes. My price package (estimated value) is worth $1,200! What is the general tax rate on winnings? When do I pay it----around tax season? Please help. I would appreciate it.:confused:
November 5th, 2002, 12:33pm
They will send you an I-9, showing you the amount they will report to the IRS. You will have to add that amount to your income, when you complete your tax form. The tax you pay will be in line with your income tax bracket, but I usually figure roughly 1/4 to 1/3 of the total value of the prize.
November 5th, 2002, 12:44pm
Wow, you won a trip! That's very exciting. I'm still awaitin'.
You can compare and provide evidence to the IRS that the trip may be over-stated as far as valuation by the prize-giver. Look for an ad for a comparable trip, clip it, and use it as evidence when filing.
I read about this here. I hope somebody else in the know can back me up.
November 7th, 2002, 11:59pm
Hi, I am new to this so I have been reading the forums about different issues and some come to mind for me. When someone contacts you about a prize that you have won and It is (for example: 6 months worth of free cookies, valued at $90) It states all taxes are the sole responsibility of the winner does this mean you pay the State sales tax for it to be awarded and sent to you OR do you claim it to the IRS. I am not sure how this works and to me it is not worth accepting a prize when you don't have the money in the first place to pay. Please tell me is it worth my time to sit at the computer to win only to have to decline due to inability to pay. What value constitutes reporting it to the IRS. I am confused about all of this. Could someone enlighten me. Thanks so much for listening to me ramble. :confused:
November 8th, 2002, 4:37am
Well, I'm not a tax attorney so I'm not giving legal advice here, but generally speaking, judging agencies don't report the awarding of prizes to the IRS if the prize is worth less than $500. It's up to you to report any winnings to the IRS or the state at the end of the year, but if you've only won some T-shirts, CDs, etc., over the year, and the total probably adds up to $200 or $300, I wouldn't really worry about it; it's not going to add much to your tax liability and the IRS/state probably doesn't know about it and they're not really going to waste their time and energy trying to track down everyone who wins $200 worth of doodads.
However, if you win something big--a car, a substantial amount of cash, etc.--the agency will definitely report your winnings to the IRS. You don't have to pay taxes on it immediately, but you will have to pay. That's why I stay away from entering sweeps with trips as prizes; you have to pay tax based on what the awarding agency says the trip is worth, whether it's actually worth that much or not (if they say that two weeks in Bakersfield is worth $3000, then that's what the IRS is going to tax you on). However, if you win a car worth $25,000, for instance, and you sell it for $15,000, you'll pay taxes on what you sold it for, not what it's supposed to be worth. As far as state tax goes, it varies from state to state. I won a car several years ago, and when I went to the state tax board to find out about my tax liability, it turned out that California (where I live) considers sweepstakes prizes to be gifts, so you don't have to pay taxes on them (the IRS unfortunately doesn't have such an enlightened outlook, so I had to pay the feds tax on it). Other states obviously have diferent policies.
December 19th, 2002, 10:04am
anything under 600.00 you dont pay tax on.If a win is over 600.00 they send you a form.If you win a big prize and you think the value is less that what the sponsor says you can get some kind of amendment form from the IRS so that you dont have to pay so much tax.
December 19th, 2002, 10:33am
As noted, this has been covered quite extensively in other threads but to make it easy I will sum up what has been said. I have been researching because I just one a $10000 trip to Vegas a couple of months ago and had no clue how to handle the taxes. Here is what the IRS states:
"Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding.
-Any sweepstakes, wagering pool, or lottery.
-Any other wager if the proceeds are at least 300 times the
amount of the bet.
It does not matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value. "
The promoters will notify the IRS as to the Approximate Retail Value but, as stated, you are taxed on the Fair Market Value which is usually considerably less for items such as a trip. This Fair Market Value is added to your income and taxed as such.
In my case, the whole package was worth $10,000 including $5000 in cash. That means the actual trip was approximated at $5000 also, which is pretty high for a week in Vegas. I did some shopping and determined that I could take the same trip for around $2500, so I will declare $7500 on my taxes (the $5000 cash plus my $2500 estimated trip cost). I will add documentation to show how I came up with the figures for my trip cost to justify my numbers to the IRS. That $7500 will be taxed as income depending on what tax bracket I end up in. Hope that helps. I think, of everything in previous threads, the best info was on real world examples.
December 19th, 2002, 11:29am
You get so many different answers when you ask tax questions. I think these guys have checked it out and had enough experience to at least help you decide whether or not it is worth it to you.As said before in this thread,different states have different laws when it comes to these things,but those charges can be relatively affordable compared to Federal taxes. Check with your state tax board to see what the rules are there.
December 19th, 2002, 12:19pm
I must get up on the soapbox since no one else will.
Just because the sweeps does not report wins of under $600 value to the IRS in no way means you are not supposed to report the win and pay taxes on it. If you don't report it you'll probably never get caught but still you're supposed to pay the taxes like a good boy or girl.
Income tax in the USA goes to many things, from keeping up the freeways to fighting terrorism. If you don't pay your tax not only are you shorting the country, but also increasing the burden on the people who are honest and pay all their taxes.
If you simply didn't know this before that is understandable - now you know. If you knew this already but still don't pay your taxes because "what the IRS doesn't know won't hurt them" then you are a criminal and stealing from this country and the good people who live here. You're robbing your friends, family, soldiers. If you don't like the system of taxation you can vote, petition, campaign, speak out publicly, run for office, cry, shout, stomp your feet or better yet just get involved in our democratic system. Or ... you can move to another country. Whatever you do, however, please don't steal from your countrymen.
December 19th, 2002, 2:50pm
Go to www.irs.gov/ the IRS home page . on the left hand corner is a search box. type in sweepstakes and it will bring it up and explain everything. hope it helps you and if you have to pay tax hope its because you got that BIG WIN!!!! GOOD LUCK Gomez
December 19th, 2002, 3:08pm
Well, with the close of another (tax) year now nipping at our heels, taxes are indeed a consideration, as well as Santa's list of who's naughty and nice. No doubt the IRS has their own lists...
Once again to repeat the famous quote from Learned Hand (U.S. Federal Court judge, co-founder of The American Law Institute, 1872-1961):
"Anyone may so arrange his affairs so that his taxes shall be as low as possible. He is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes."
There is law, and there are ethics. There is doing what's right, there is getting caught, and there are gray areas all around. In addition to Federal income tax, many states have income and sales taxes, each with their own rules and enforcement policies.
The FACT is that people here should realize that there ARE tax implications to winning stuff. Whether wins are reported to the IRS by the sponsor might affect your decision to report them yourself, or it might not. My expectation is that most any win is something for which your taxing authorities would prefer that you account for and pay taxes, at the highest possible rate, but that most of you are not going to rush out to declare and pay taxes on remaindered CD's (with the little holes punched in the boxes so they can't be returned to stores for credit), logo tshirts and the like.
Since only YOU will be responsble to sign the checks and the tax returns, then YOU should become as informed as you see fit, and take any advice or opinions on message boards and such...under advisement.
Finally, just to keep it light, another quote:
"If income tax is the price you have to pay to keep the government on its feet, alimony is the price we have to pay for sweeping a woman off hers." - Groucho Marx
"Well, golly, if that doesn't put the "shaz" in shazam. Oh, listen: what's the cash value of those tickets so I can report it on my income tax?" - Ned Flanders (The Simpsons) after winning football tickets
December 19th, 2002, 6:55pm
Anything over $600 is reportable and taxable.
December 19th, 2002, 8:35pm
EVERYTHING is taxable!!! Everything over $600 has to be reported by the sweeps sponsor to IRS, and they have to send you a form 1099 to file with your taxes. Some sponsors send a form 1099 for lesser amounts; I got one for $200 once, and another for a DVD player (ARV $159).
For everything over $5000, the sweeps sponsor has to withhold taxes.
Neither statement means that you don't report the value of prizes under $5000 or $600 or other amounts stated elsewhere in this thread. If you don't want to pay tax on prizes, don't enter sweepstakes. If you get audited and have to pay a huge fine for failure to pay taxes on your wins; don't complain.
Al - a lawyer - Witmayer :mad3:
PS Back to lagarcia264's original question... no you don't pay sales tax. You are not "buying" the prize. You have to pay income tax on the value of the prize the following April.
And if you win a car worth $25K and sell it for $15K; sorry - you got a new car worth $25K and sold a used car. You owe tax on $25K. However, if the sweep sponsor sent you a 1099 saying the value was $25K, and the same model is advertised in a local paper for $15K - save the ad (with the 1099) and declare the lesser value for tax purposes.
December 19th, 2002, 11:42pm
after you go into the IRS website type it Sweepstakes. in the first line in gaming witholding.It tells you all the different taxes.just page down.and you will see drawings and prizes.also I though this was a friendly forum to help other people.You have to make a nasty comment about hope i never get audited.Well considering you were audited 3 times i dont think thats very organized.
December 20th, 2002, 10:16am
I told you I was not friendly! :mad: (That's probably why I was not asked to be a moderator).
Yes, I have been audited 3 times; and 3 times I have been complemented by the IRS. You are flagged for audit when something in your return is more or less than usual; i.e charity contributions. I assume in my case sweepstakes wins were the trigger. Also, I had broken off a romantic relationship with a female IRS big-whig when I became serious about my current wife. But I hate to think that I was audited out of jealousy or revenge.
Again, my advice was to ask a tax professional - not to rely on anyone's advice here. The IRS has a help-line you can call and get your questions answered, if you do not have access to a tax consultant.
The referenced IRS website says "prizes over $600 most be reported on form 1099." Nowhere does it say do not pay tax on prizes under $600. Please read my earlier post. Thank you.
I don't mean to offend (well, maybe a little :mad3: ) but every time someone asks about taxes we get so many, let's say "differing" views. They can't all be correct. I sincerely hope that no one here gets audited (it is not a pleasant experience) and that if you are, your records are adequate. And to end on a positive note; you all have a Merry Christmas and a lot of wins in '03.
December 21st, 2002, 9:35am
IRS HELP LINE
MONDAY-FRIDAY 7AM-10PM ET
December 22nd, 2002, 1:48am
alwitmayer wrote earlier in the thread:
For everything over $5000, the sweeps sponsor has to withhold taxes.
I just recieved my $25000 check from the STARZ win (actually, the check came from the sweepstakes administrator...not STARZ themselves) without any witholding. Fortunately, I contacted my accountant, and she wrote up a special form on how much I needed to pay before year's end to avoid a witholding penalty. My point is don't count on sponsors or administrators to know the tax law. It's your responsibility!
December 23rd, 2002, 8:13am
The original thread and all of its original posts have been moved to the General Sweepstakes Discussion forum:
If you have pertinent information to add to the subject, please post it here in this thread. But if you guys want to go another round with Gomez on this issue, please follow the link above and post there. And please be respectful. :)
December 23rd, 2002, 10:30am
I know a lot has been said on this subject but I felt like I should butt in. I prepare tax returns for a company who does individual returns. Everything you win is taxable and reportable. Most company's will send you a 1099 or W-2G for you wins of about $600 or more. The amounts you lose gambling can be subtracted from your amounts of winning ( you need to itemize to claim this, and only up to, the amount of your winning can be deducted) All of this goes on line 21 of a 1040. The Irs wants ALL forms of income reported. (This same line is used to report income from illegal income, such as stolen or embezzeled funds.) IF you refuse to accept a prize or award you do not have to include its value on line 21. Unless you win something big then I wouldn't worry about making Quarterly payments of your taxes. The little wins won't affect your tax liability by much. They will change your AGI but that is before you take your deduction(s). Your tax isn't calculated until after your deduction is taken. So a prize with ARV of 90 would only affect your tax by about $3or so. Could be more but you would have to make alot of Money and I don't think you would be asking these questions if that were the case. You have to contact your state about the tax liability you have with them as it varies from state to state. Personally I would just enjoy my cookies and call it a day.:smile2:
December 23rd, 2002, 12:46pm
Thanks for the info, Katzprizim. I've got a headache now, but thanks. I'm more relieved than ever that I hired a tax advisor/accountant/do-it-for-me person. I'm an idiot when it comes to this stuff. Oh, who am I kidding? I'm an idiot when it comes to a lot of other stuff, too. the end.
February 25th, 2003, 1:44pm
There is a lot of discussion around taxes - lots of threads floating around - do a search (upper right hand corner of your screen) and you will find a bunch of info on the subject! :) Good luck!
March 21st, 2003, 8:59pm
Such a long thread and so much said, and many other tax threads but just maybe this will help someone.
I am broke. I'm a single mom waitress with three kids and in a low low tax bracket. I have never, ever had to pay tax on a win. A win is income, plain and simple, and the rate at which you will be taxed depends on your total income.
Once when the taxes were withheld beforehand, it resulted in a GIANT refund for me, the prize tax money plus what I had paid in.It all depends on your individual circumstances.
Oh and by the way, I'm happy to say I've won some good stuff, a lack of winning is not the cause of my lack of tax debt, it's poverty!
March 22nd, 2003, 1:26am
It really depends on the way you report wins. You can report them as "other income" or you can report them as "gambling winnnings." Gambling income is taxed at 27.5 percent. "Other income" is taxed according to your tax bracket.
Gambling losses can be reported up to the amount of wins, which means you can write off postage and any other expenses associated with sweepstaking. If you choose to report wins this way and write off expenses, it's a good idea to talk to a tax consultant first. Some consultants will insist that this throws up a red flag to the IRS. I don't think that's true. The tax guides I've read have clear-cut rules for reporting wins and losses, and they do consider sweepstaking gambling.
Most people I know, myself included, just report the wins and forget the losses.
March 22nd, 2003, 12:34pm
From my understanding the USA also imports and exports goods and services, creating income for our country.. :confused: Im sure someone not reporting a $10 will NOT peeve the IRS (well if thats the ONLY thing they've excluded)
I won $2500 and did NOT receive a 1099. I called/emailed the company and after a few rounds was told "we will NOT report it to the IRS" :rolleyes:
However i did report it on my taxes......:smile2:
But yes you CAN offset your winnings with your losses and some casinos offer a win/loss statement.... Your best bet is to consult a TRUSTED tax advisor.....
April 4th, 2003, 12:59pm
I have been to a casino that to play bingo and noticed that most of the regular jackpots were $1,199. I asked my friends why and they said that for tax reasons that's the most they can payout without having to report it to the IRS. Then I had the opportunity to talk to a tax' expert' through the radio station. He confirmed the casino $1,199 reason and said I didn't have to report my $600 radio winings. So I didn't but I'm curious why the tax form I received only had one copy and it was labeled for the state? I guess the state still wanted it's share but the feds weren't interested.
April 4th, 2003, 1:06pm
..if sweepstakes winnings could be treated as gambling winnings. I was quoted something that said, more or less: Anything that you receive on a 1099 has to be treated and reported as regular income, not gambling winnings. Gambling winnings are reported on a different form that is distinct from a 1099.
April 23rd, 2003, 2:35am
this answered my questions! i also do not enter vacations unless i REALLY want them!
April 26th, 2003, 8:48pm
If it is a big win. You will get a 1099 at the end of the year. On your taxes you will be able to claim fair market value for the item. For an example; if you won toys and the 1099 said $1064. But you checked toy prices and they were only worth $650. You would only have to claim $650 on your taxes.
May 11th, 2003, 4:30pm
I'm new to this - OS and entering in general - and I haven't won anything, but I can feel it and I know it will happen soon! :-) I'm curious about the whole "winner must pay taxes, etc." How much would this be - do you have to submit proof that you can pay, or do they let you round up cash from parents/siblings to keep your prize? I can't imagine giving up a prize b/c of taxes, but I may be underestimating the cost involved in winning.
Thanks for your help!
May 11th, 2003, 4:37pm
sorry all...just realized i could do a search and see all the good advice that has been given about taxes in the past - thanks anyway! hopeuflly my next post will be a win and I can pay the taxes
May 11th, 2003, 6:43pm
If you win a prize of $600 or more, the sponsor will send you a 1099 form at the end of the year. You must include this amount as other income on your tax forms. If you receive a 1099 form, a copy of that form has been sent to the IRS also.
May 11th, 2003, 7:13pm
"do you have to submit proof that you can pay, or do they let you round up cash from parents/siblings to keep your prize?"
I haven't seen that particular question asked. I'm no tax lawyer or accountant but my answer is they don't care - you get the prize and it's your tax problem, they're done with it (IOW, you don't have to come up with tax cash to accept a prize - the IRS will take care of that the following April).
May 11th, 2003, 7:44pm
You can also deduct all costs involved in winning the contest or any contest. Your gambling cost can match the cost of your winning but not exceed. Also find a cheaper cost for your prize and the IRS will accept that. I deducted the cost of my cable modem, receipts for stamps to enter snail mail, etc. Ended up not paying anything on my $6,000 win.:cheer:
May 11th, 2003, 8:24pm
I've won several prizes over the $600 mark and have as yet to receive any 1099's. Since the companies are apparently not reporting my winnings, neither am I. Last year I won an all-expenses paid Utah ski trip (worth $2200), $3200 rims, and $1000 cash, all of which I was expecting to receive some kind of tax statement at the end of the year, but never did.
May 11th, 2003, 10:38pm
well - thank you all! I'm thinking b/c I'm a poor graduate student, the tax burdens shouldn't be too bad should I win. But - I guess the first step is just to hope for a win and go from there. I'm taking others advice on these forums, to only enter contests where I really want the prize. So, if I win I will find a way to make it work! Thanks again - good luck all - Brian, congratulations on all those freakin wins..I'm jealous!
May 27th, 2003, 3:29pm
I have won a prize from Hewlitt-Packard ($2k worth of server computer stuff). Can they charge me sales tax AND then send me a 1099? That is taxing me twice!!! Just wondering what the rules are.....
May 27th, 2003, 4:24pm
Absolutely! (And double taxation is normal; Welcome to the USA!!) You are taxed on your income and then you pay sales tax when you make purchases.
I have paid sales tax on some of my wins. Though it is not necessarily the norm to charge sales tax to winners it is within their rights to do so.
Congratulations on a great win!
May 28th, 2003, 7:56pm
If you win a car don't you have to pay taxes on that right on the spot when you pick up the car or when it's delivered?
May 28th, 2003, 8:23pm
I've won a trip. I have to pay the usual taxes on the tickets (approx $105 per ticket.), in addition to the federal income tax. By that I mean the taxes that you pay everytime you get a ticket. Those taxes are supposed to go into a trust fund to upgrade airports.
When I get to my destination, I will probably have to pay the local resort or room taxes, the departure tax and probably a few other feees that I haven't thought of. These taxes are in addition to the income taxes that I will pay on the fair market value of my winnings.
Check with www.irs.gov, if you win cash, you may have to pay quarterly estimated taxes. If you win merchandise however, you usually don't have to pay any estimated taxes.
PS You still owe taxes even if you don't get a 1099. Ignoring that fact could be very expensive. The IRS doesn't care of if the company screws up (except to fine them for sloppy record keeping). When they come to get you, they want payment of taxes PLUS interest and penalties.
June 1st, 2003, 2:13pm
I am thinking of entering an essay contest where the prize is a savings bond. When it matures the bond will be worth $10,000, but the contest sponsor paid $5000.
Has anyone had any experience with this type of situation? Would I claim $5000 or $10,000 on my taxes?
June 1st, 2003, 2:46pm
Can we deduct the monthly expense of, in my case, Cox High Speed Internet service if I win a big prize? Stamps for snail mail winnings, etc.
OK--the stamps aren't much, but the cable modem service is pretty pricey and I have the receipts for it.
Not that I've exactly won anything to worry about the taxes yet!
I don't know--as far as taxes--anything I buy for my classroom that I don't get reimbursed for I can use as a tax deduction--not a credit! With every state in the union hurting for money, the way the budgets have been lately, it's just ridiculous. Teachers of the World Unite!
I certainly won't do anything illegal, but I'm looking for every deduction possible. As was recently noted in a post about families not getting an expected $400 tax break, so that the wealthy would get a tax break--I don't believe the tax situation in our country is fair at all.
June 1st, 2003, 5:29pm
If anyone is interested
is a document that can answer most of your questions and page 46 talks about winnings and 47 gives you a chart that you can use to see if you need to pay estimated taxes.http://www.irs.gov/pub/irs-pdf/p17.pdf