I have a stupid tax question

[preshi]

That prize I won yesterday... I found out it's worth quite a bit of money.... do I have to claim it? I know it's dumb but I don't want to get in trouble.

 

[gepetto]

yes

 

[Goofyposter]

Groosch....I think if it's worth more than $50...you do need to report it....It's it's less than $30K....then perhaps it can be deemed a "gift" (30K once in a lifetime from one source, or 11K annually) I believe can be kept without an income liability....but I'm 'nert' an accountant....you should ask your tax advisor to be safe

 

[Kermit]

Do you mean do you have to claim it on your taxes or do you have to claim the prize? If you accept it, then you do have to pay taxes on it. But I don't think anyone can make you take a prize if you don't want it. (The only thing I've ever won is a large ball made out of rubber bands, so I'm no expert. )

 

[preshi]

Ok so... well I already accepted it. It's worth about 800 dollars. so I just have to pay tax on it or can it be claimed as a gift? I am confused now.

 

[ryanpatricksmom]

I didn't see the post regarding a prize, but as a general rule the answer is yes. The prize may actually be reported to the IRS by whomever ran the contest.

 

[gepetto]

Didn't you have to fill out some paperwork when you claimed it?

 

[Goofyposter]

so I just have to pay tax on it or can it be claimed as a gift? I am confused now.

Preshi...individuals (which I believe includes corporations) can "gift" to any person upto $11,000. per annum (forever)...without the reciever having to pay tax on it if it was a 'gift'....similarly a person can give away upto 30K to another as a one time deal w/o tax liability. I also missed your post as to what it was you won, who gave it etc.., but I'm thinking there's a fair chance you will not have to pay income tax on it...but, check with whoever does your taxes to make sure!

 

[gepetto]

http://www.irs.gov/faqs/page/0,,id=15768,00.html

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 (other income), Form 1040. If you receive merchandise, you must report the fair market value of the item(s) as income. Refer to Chapter 13 of Publication 17, Your Federal Income Tax, for additional information.

 

[preshi]

Thank you gepetto!

 

[Toby'sFriend]

Preshi - What did you win? I must have missed the post.

 

[shep]

I thought you had to claim it if it was more than $500...
Hope I don't get audited..

 

[coqui]

Also I may have missed this but don't you only have to claim it if is a monetary prize?

I mean the people around here that win New homes don't pay additional taxes beyond property tax (that I know of)

If it's cash (lotteries and stuff) yes you have to report it.

I'd check if you have to report for physical prizes as well.

 

[preshi]

I won the whole Marc Jacobs perfume collection. Heres what it inculdes... I dug through all my magazines until I found the contest.
Marc Jacobs perfume
Eau de Parfum spray
perfume purse spray
solid perfume compact
shimmer body powder
body cream
body lotion
shower gel
a candle
and Marc Jacobs Men eau de toilette spray.

I am going to smell realllllly good for awhile... LMAO

 

[Steve H.]

coqui -- no, the law in this case applies to any sort of prize, money or otherwise.

 

[Toby'sFriend]

Very Cool Preshi.

The question here is what the prize is actually worth - not necessarily what they list it at in their catalog.

Let me ask you this - if you received the prize and tried to sell it that very day on EBAY or somewhere similar, could you get the full $800? If not you have a very good case for not claiming the entire $800.

That is if you are willing to risk a fight with the IRS.

 

[ryanpatricksmom]

Preshi, I wouldn't declare $800 in gambling winnings given what you've listed. You are supposed to come up with a fair market value, but truthfully I wouldn't lose alot of sleep over it. Pick a number (less than $800 for heaven's sake!), enter it, and I'm sure everything will be fine.

 

[ripleysmom]

Preshi, if they ask you for your SS# then chances are you will be receiving some type of 1099 form for the prize.

If they don't request it then you have the choice of claiming it or not since this means that they probably will not be reporting it to the IRS.

 

[Indyman]

I have a stupid tax question

I thought you meant they were taxing stupidity. What a great way to increase revenue!

 

[preshi]

Originally posted by Indyman
I thought you meant they were taxing stupidity. What a great way to increase revenue!

Amn you hit te nail on the head with that one.... LOL