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  Old  April 17th, 2009, 2:19am     #1
jelloarms is offline
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Question Recieved Gift Card, but unsure about taxes?
So I just received a 20 dollar gift card in the mail today. I won't say which contest it's for b/c it was for Premium members. But now that its tax time, I am freaking out. I've never had to deal with taxes before...my mother usually does it.

So how does it work? How do I pay taxes on the gift card? Will I be recieving a statement in the mail later proving that I won the gift card and I owe taxes? How does it all work?
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  Old  April 17th, 2009, 2:49am     #2
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I'm not 100% sure but I think it is just like income, anything under $600 in value is not required to be reported on your taxes. You can call any tax company and they should be able to tell you for sure!


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  Old  April 17th, 2009, 3:07am     #3
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I would not worry about paying taxes on something small like that

trust me..you will not recieve a statement
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  Old  April 17th, 2009, 4:12am     #4
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If I don't receive a 1099 or sign an AFFY I don't pay the taxes. Poor Uncle Sam.

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  Old  April 17th, 2009, 7:26am     #5
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The info found here (mostly from the IRS website) may help.
sweep wins and income taxes...reference
Just an FYI, ALL prizes are considered "income" as far as the IRS is concerned. Consult your own tax advisor about your own situation.


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  Old  April 17th, 2009, 7:26am     #6
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Quote:
Originally Posted by jelloarms View Post
So I just received a 20 dollar gift card in the mail today. I won't say which contest it's for b/c it was for Premium members. But now that its tax time, I am freaking out. I've never had to deal with taxes before...my mother usually does it.

So how does it work? How do I pay taxes on the gift card? Will I be recieving a statement in the mail later proving that I won the gift card and I owe taxes? How does it all work?
Taxes are paid on prizes in the year that you actually receive the prize.. your $20 would go under the heading of miscellanous income on line 21 of your tax form for next year.

What I've done is listed larger prizes that I didn't receive a 1099 for separately with a description ie: Old Navy instant win game $500, for small prizes like your gift card I added up the total amount of these small wins and put the total in it;s own box on line 21 with the description misc small prizes total.

From my understanding of tax issues the big issue with line 21 is that if you report over $400 in misc income that the return gets looked over more closely to decide if you really should be filing a schedule C, I save copies of winning emails and screenshots for instant wins in case this issue arises.

In compliance with OLS rules, I have removed the link to my site

http://swagbucks.com/refer/geekbabe
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  Old  April 17th, 2009, 7:33am     #7
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Even in the top tax bracket, taxes on a $20 gift card is only $7.80.

I am a CPA, and while the rules say you must report all winnings as income. If the total amount of your winnings from this sponsor is less than $600, they are not reporting it to the IRS. So, don't panic over it.

My Wins
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  Old  April 17th, 2009, 8:38am     #8
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You usually get a letter with your win.. just keep that in your income tax file so when time comes next year you can add it as misc. income.. no big deal!

And, as posted previous.. normally nothing is reported to IRS unless over a certain amount.. and when it is reported, you would usually get a form in the mail at the beginning of the year (you would also have had to fill out a form for the prize with your social security info)..

Tax laws require you to report all income.. just like the state wants people to pay the state sales taxes on internet purchases that weren't taxed when you bought them.. it's all "on the honor system"

Time to win, win, win!!
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  Old  April 17th, 2009, 8:59am     #9
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Quote:
Originally Posted by jelloarms View Post
So I just received a 20 dollar gift card in the mail today. I won't say which contest it's for b/c it was for Premium members. But now that its tax time, I am freaking out. I've never had to deal with taxes before...my mother usually does it.

So how does it work? How do I pay taxes on the gift card? Will I be recieving a statement in the mail later proving that I won the gift card and I owe taxes? How does it all work?
I wouldn't worry about it at all. Think of it like winning $20 bucks from a scratch off lottery ticket. The IRS never gets involved.


You would only get a 1099 form that is reported to the IRS for $600 and above.
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  Old  April 17th, 2009, 9:16am     #10
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Originally Posted by Tommyc68 View Post
I'm not 100% sure but I think it is just like income, anything under $600 in value is not required to be reported on your taxes. You can call any tax company and they should be able to tell you for sure!

Yes, it is. EVERYTHING you win is required to be reported on your income. Will the IRS find out about it if its under $600? Probably not. Therefore, do most people report things they win under $600? Probably not. Is that cheating on your taxes? Yes.

It's everyone's decision whether or not to declare stuff like that, but legally speaking, yes you are supposed to. But in the year you get it, so you have until April 15 2010 to decide how you personally want to handle it!
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  Old  April 17th, 2009, 9:52am     #11
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Quote:
I'm not 100% sure but I think it is just like income, anything under $600 in value is not required to be reported on your taxes. You can call any tax company and they should be able to tell you for sure!
That's not accurate. Everything is required to be reported to the IRS. It's up to each individual whether or not they are going to be 100% legit and report everything they win.

And I have gotten a 1099 on items under $600. It's all up to the sponsor and what they want to report. I won a beach towel worth $15 and the sponsor sent me an affy that had to be notarized AND they reported it to the IRS. They were giving away like 100,000 of them and I'm sure they wanted the tax write off as well. Sponsors get tax breaks just like us and they claim it as marketing dollars. Just depends on whether or not they want to go through the hassle of sending out all those 1099's and all. The opposite has been true as well. I've won prizes over $600 and did not have to have it notarized, sometimes no affy, at all. My husband won a Select Comfort bed worth $4500 and we received no paperwork whatsoever. He got an email saying he won and all they wanted was for him to respond via email with his address. No affy that we had to have notarized or anything. Two weeks after he got the email stating he won we got the voucher for the bed and a week later the bed was delivered. I was in total shock at how little information the company got from him considering the value of the prize. No one has any information other than his name and address so technically speaking the IRS would never be notified that he won this because no one obtained his social security number. But I am still claiming it on my taxes as a win.
If a sponsor gets my social security number, I always claim that win on my taxes. If they get my social I assume they are going to report it to the IRS and don't want to take the chance of not reporting it and it later coming back to bite me in the butt. If I don't give them my social I usually don't claim it, but that just depends on the value of the prize. The bed I'm going to claim b/c the ARV was so high but there have been small wins, $25 Amazon gift cards for example, that I don't claim b/c I'm confident the IRS won't be notified.

PM me for a LOCKERZ invite. Earn points for awesome prizes. Marc Jacobs handbag for 350 pts, iPod for 300 pts.
http://swagbucks.com/refer/GermanyJ
http://www.superpoints.com/spd/gugel98
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  Old  April 17th, 2009, 11:56am     #12
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I claim everything
Several years ago someone on this list said that they got audited. Mainly due to inflated 1099s on trip wins, as I remember it. This person had been meticulous about claiming EVERY prize no matter how small. With that record, the IRS accepted all his info on the big prizes.

I keep a file with all my wins each year and I claim them all. I never know when I might get a $10,000 1099 for $500 worth of stuff and have to justify it to the IRS. If I've been scrupulously honest in my returns in the past, I should get the benefit of the doubt. However, if I get audited and haven't claimed the little prizes, it will be very obvious to the IRS. No one wins just big prizes over $600 reported on the 1099.

I wouldn't be surprised if someone from the IRS doesn't monitor these boards in order to catch the tax cheats who aren't claiming the little prizes. Or someone from this board doesn't report tax cheats to the IRS. There is a reward for turning in people who cheat on their taxes.

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  Old  April 17th, 2009, 12:08pm     #13
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Let me say though, the taxes that were due April 15th are only from 2008. I see you are new, so if you didn't win that giftcard in 08' you won't list that until next year for your 09' taxes. Hope that makes sense!

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  Old  April 17th, 2009, 12:23pm     #14
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Quote:
Originally Posted by suelee000 View Post
Several years ago someone on this list said that they got audited. Mainly due to inflated 1099s on trip wins, as I remember it. This person had been meticulous about claiming EVERY prize no matter how small. With that record, the IRS accepted all his info on the big prizes.

I keep a file with all my wins each year and I claim them all. I never know when I might get a $10,000 1099 for $500 worth of stuff and have to justify it to the IRS. If I've been scrupulously honest in my returns in the past, I should get the benefit of the doubt. However, if I get audited and haven't claimed the little prizes, it will be very obvious to the IRS. No one wins just big prizes over $600 reported on the 1099.

I wouldn't be surprised if someone from the IRS doesn't monitor these boards in order to catch the tax cheats who aren't claiming the little prizes. Or someone from this board doesn't report tax cheats to the IRS. There is a reward for turning in people who cheat on their taxes.
I claim it all too- we have gotten letters from the IRS and have proved those little things are included and were cleared- years ago we moved- and i mean years and years and moved to another state and really just forgot about a win and it took 7 years but it caught up with us and paid- since then I report it on everything , and with a martha stewart win I was questioned-0t was only a few hundred dollars and yes I filled out an affy but never got a tax form- that only took a few years but we proved we actually claimed it. Yes it takes the irs time sometimes- but watch your back if you win and have filled out an affy and not gotten the info, and one company keeps the ss on file once you fill one out so you may get a nice letter from Uncle sam and Aunt Irs asking did you claim on taxes. It really is not worth the stress or the panic attacks when those letters come..I know if i get anything I am clean and doing things legal.

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  Old  April 17th, 2009, 12:33pm     #15
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Whoa! We know NOTHING about her situation.

OP, do you not do taxes because you do not have any other income? Are you still claimed as a dependent on your mom's taxes?

Just start a file for your wins for this year and worry about it NEXT January.

But if you are still being claimed by your mother, you should talk to her before you enter any BIG prizes because you could seriously screw up her tax situation.
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