taxes on big prizes????

[logan&tylersmama]

just wondering - if you win a big prize - like the night in the castle - and I am sure there is a monetary value to it - do you have to pay taxes on it and claim it as part of your income. I know if you win a prize on a gameshow or in a contest that is over $2000.00 you have to claim it as part of your income for that year
Here in CT - they tax everything!!!
Jennifer

 

[Stitchfans]

Good question.

 

[red1der1]

I read somewhere the castle stay is only worth around 575.00. I think most states it has to be over 1000.00 to pay taxes. Now I also read that for something like DVC dream, you get a check annually to cover the cost of the taxes each year.

 

[CanadianGuy]

Most of the truly large prizes.. Disney includes in the value of the prize some cash to help cover the taxes.

The castle suite stay is purposefully valued low to prevent taxation for most winners.

Knox

 

[CanadianGuy]

From the Contest Rules..

ARV of each prize as of August 1, 2007 (assuming the prize awarded is a membership at Disney's Saratoga Springs Resort & Spa): US $87,361, which includes

(i) the conveyance of a real estate interest in Disney's Saratoga Springs Resort & Spa or other Disney Vacation Club Resort chosen by Sponsor represented by 220 vacation points at the current membership price of US$22,880; and

(ii) the payment of all annual dues (excluding any special assessments) during the time that the winner owns the real estate interest, which has an estimated value of US$33,156 (based upon the 2007 annual dues of US$4.12 per Vacation Point, escalated at 5% per year and discounted at 6%, the current Applicable Federal Rate, over the life of the membership); and

(iii) any exchange fees incurred by the winner during the time that the winner owns the real estate interest, in exchanging, from time to time, the winner's vacation points for other vacation destinations, which has an estimated value of US$749 (assuming the winner exchanges vacation points every three years and a current exchange fee of US$95 escalated at 2.5% per year and discounted at 6%, the current Applicable Federal Rate, over the life of the membership); and

(iv) a cash prize equal to US$30,576 to help defray payment of taxes payable as a result of winning the prize. The actual retail value of the prize may be different at the time the prize is awarded as a result of, among other things, increases in the purchase price of memberships and/or a selection by Sponsor to award as the prize a membership in a Disney Vacation Club Resort other than Disney's Saratoga Springs Resort & Spa. Sponsor makes no representation or warranty that the cash portion of this prize will be sufficient to pay winner's tax liability.

They pay all the annual dues and give you a one time lump sum payment to cover the taxes.

Knox

 

[logan&tylersmama]

very cool - thanks
Jennifer

 

[mountdew1]

Kinda makes you wonder if and when they make the castle suite available to stay in, will the cost stay at 575/night? Or will it go up as high as the market can afford.

 

[AuroraBeauty]

I assure you that Disney is not fooling around with the IRS. If their attorney's reading of the tax law says you should get at 1099 then I guarantee you that the CMs know to get you to fill out the W-9 form.

Maybe someone who has stayed in the castle can comment.

 

[kidd_freeper]

I have won two trips to WDW, one through McDonalds and the other through Alamo.com (in 2006 and 2005, respectively). I am also from Connecticut.

Each trip was valued at about $4200. Yes, the value of each trip was added to my income and thus increased the amount of tax I paid. The issue of withholding is settled before they officially award the trip to you. Its a simple single page form that needs to be filled out that makes sure you understand that you may be responsible for more withholding.

In my case, the previous year's withholding would cover the added tax burden, thus I did not need to pay additional withholding.

So in reality, the trip was not free. But I got to fly the whole family to WDW, stay at the Poly and visit the parks for 4 days for about $1000 of real money. 75% off.