April 19th, 2011
How do the taxes work?
One question we are frequently asked by winners is in regard to taxes….they would love to accept a prize, but are unsure of the tax obligations. So here is the skinny on how it all works. If you win a prize that has a retail value of $600 or more, you will be issued a 1099-MISC Tax Form in the following calendar year that will reflect the retail value of the prize. The 1099-MISC Tax Form is a form used to report to the IRS income as the result of a prize won. It is also used to report rent, royalties and a variety of other types of income. The amount of taxes each individual winner will be required to pay to the IRS really depends on their household income, deductions, etc. So it is always best to consult your tax advisor when determing if a prize is financially reasonable for any winner to accept.
Categories: Budget Friendly, Economy, Prizes, Tips, Winners
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