WWTBAM-PI! Tax Question

[WEDWDW]

Does anyone know how much the tax liability is if you win the Disney cruise?Thanks.

 

[sunking]

No idea but I have to ask...Did you win????

 

[WEDWDW]

No,all I won was the 1000 point cap and pin/lanyard set.I would really like to win the cruise one day though!

 

[hightown]

Actually, I won on 10/16/04. I haven't taken the cruise yet but they did get my SS# and it was clear that the cost of the cruise will be taxable. The amount depends on when you book, time of year, number of people (your allowed 4 max) and if air is needed. The forms give a value amount for all the other prizes of (can't recall for sure) about $750.

It will be well worth paying tax however!

 

[ToriLammy]

When you win any prize valued over $600 the sponsor of the prize (in this case WDW) would be required to send you a 1099 for tax purposes. It's hard to say how much the cruise is worth without knowing what kind, when, how many people etc. The tax liability would vary from person to person - for example if my teenage daughter (18) won a cruise she would not have to pay that much in taxes since her income is pratically nil so her liability would be may 10% or $350 on a $3500 cruise. On the other hand a $3500 cruise could put us (her parents) in a higher earning bracket thus raising our taxes and cost us $700-$1000 in taxes. Still cheaper than paying full prices. Good luck - hope you win one

 

[WEDWDW]

Thanks for the info.I thought I had heard that when you win a prize that the "prize tax" was around forty per-cent.The ten to twenty-eight per-cent rate sounds alot better.

 

[SnackyStacky]

I REALLY think that stinks. If it was a cash prize, I could certainly understand the government taking money - but no money changes hands. There's NO need to tax a dang cruise!

Sorry for hijacking the topic and insterting $.02 that NOBODY asked for!

 

[WWTBAMFAN]

I do not understand the fuss. You are getting a package worth a certain amount and that amount is taxable. If you do not want to incur the tax liablity, you can decline the prize. Just because the prize is not in cash does not mean that it does not have a market value and can not be taxed.

The guests who got cars on Oprah had the same proplem. Some had to sell the cars to pay the taxes but there are better off before hand than they were before they got the prize.

Back before the thirty day rule, I won three shirts in the same year and Disney 1099 me. It was not big deal.

 

[SnackyStacky]

I do not understand the fuss. You are getting a package worth a certain amount and that amount is taxable. If you do not want to incur the tax liablity, you can decline the prize. Just because the prize is not in cash does not mean that it does not have a market value and can not be taxed.

The guests who got cars on Oprah had the same proplem. Some had to sell the cars to pay the taxes but there are better off before hand than they were before they got the prize.

Back before the thirty day rule, I won three shirts in the same year and Disney 1099 me. It was not big deal.

It's not a fuss. It's my opinion. Didn't ask anyone to agree with me. Just stated my opinion.

 

[ralfrick]

I REALLY think that stinks. If it was a cash prize, I could certainly understand the government taking money - but no money changes hands. There's NO need to tax a dang cruise!

Sorry for hijacking the topic and insterting $.02 that NOBODY asked for!

You seem to be forgetting that the Mouse will take a tax deduction for the value of the prize. So if the feds won't get the $$$from Disney, they want it from the prize winner.

Cheers.

 

[rflorek]

This is from the IRS web site:

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 Form 1040, line 21. 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.


Robyn

 

[SlightlyGoofy]

I have several friends who are heavily into doing contests. I enter a very few. Trouble is while I do not mind paying taxes on something I would enjoy, like the cruise, I do not want to pay taxes on an orange shag rug or whatever second or third prize might be.

Taxes are assessed on what the company says it is worth and I believe that they inflate the value to make it seem as if they are giving away far more than they are. I would suggest, that if you should win something, that you do some competitive shopping and validate your claim for the lower valuation for your tax base. I have read of others doing so.

May all your prizes be worthwhile and valuable.

Slightly Goofy (who once won a case of expensive whiskey and does not drink)

 

[mariethecat]

We were at WWTBAM on New Years Eve for 2 shows. They said someone had won the cruise the day before. How often is someone winning the cruise?

 

[SnackyStacky]

You seem to be forgetting that the Mouse will take a tax deduction for the value of the prize. So if the feds won't get the $$$from Disney, they want it from the prize winner.

Cheers.

This is from the IRS web site:

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 Form 1040, line 21. 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.


Robyn

I understand that you have to pay income taxes on prizes.

I'm not disputing that.

I was simply stating my opinion that I don't think you should have to.

Once again, I understand full well that you have to pay income taxes on any prizes won, and that Disney will declare it as a deduction. What I have stated is strictly my opinion, and I'm not asking anyone to agree with it.

 

[Lori-n-NY]

My friend Sharon, HIGHTOWN (responded above) was winner number 97 on 10/16/04. The CM's were telling us that that week they had three winners but it has been about 5-6 weeks since the last winner.

Winner number 97 since the beginning of the show, which I believe was in 2000...someone correct me if I'm wrong....means about 25 winners a year.

It was so exciting to be there. Sharon had a lot of people congratulate her durning the day at MGM and had people at our resorts do the same thing. And when we all returned home and she posted that she won there were other DISers in the audience that show too. She loves her Million Point Winner bomber style jacket that is labeled Limited Edtion. (Not for sale anywhere and you only get the jacket by winner the top prize level.)

I hope everyone had good luck if you get to the hot seat.

Lori

 

[SlightlyGoofy]

Lori, I was there that week and competing. It would have been almost as good as me winning, which I did not, to have seen someone else win and especially a fellow DISer. I had heard the same as you and figured it was about one winner every two weeks since it started. I did not know whether to be discouraged by so many winners that week or encouraged. LOL

BTW, did your friend happen to be in the audience the day that a lady kept winning the Hot Seat and had to pass since she had already done it, all day long? If so, that was me. Shows what I can do when the pressure is off. LOL

Slightly Goofy/Linda

 

[leebee]

I know, it seems like a rip off to win something and still have to pay taxes on it. Of course, you earn your salary and pay taxes on it. If more money is withheld from your salary than is your eventual tax liability, you get a refund check. This refund check, although it is salary which you have already earned and paid taxes on, becomes part of next year's income and you have to pay taxes on it again. SHeesh...never try to figure out the IRS!!!

 

[georgina]

I know, it seems like a rip off to win something and still have to pay taxes on it. Of course, you earn your salary and pay taxes on it. If more money is withheld from your salary than is your eventual tax liability, you get a refund check. This refund check, although it is salary which you have already earned and paid taxes on, becomes part of next year's income and you have to pay taxes on it again. SHeesh...never try to figure out the IRS!!!

Are you paying taxes on a FEDERAL tax refund? I've never heard of anyone doing that.

Now, my state tax refund that I deducted from the previous year's federal tax is counted as income, which makes sense, and it gets deducted again.

I've won pins and hats and shirts from Disney, and never declared them. They don't report the smaller prizes to the IRS, so why should I? (Fuzzy tax logic)

 

[SlightlyGoofy]

Leebee, I believe you only have to pay taxes on a refund if you filed long form which would mean that you had deducted your taxes in the previous year.

Slightly Goofy/Linda

 

[WEDWDW]

I am CONFUSED!When I won the prizes for reaching the 1000 point level,I specifically asked the Cast Member handling the paperwork if I would have to pay taxes on the prizes.He said that because the value of the prizes was under a certain amount,I was not required to pay taxes on them.But,according to the post quoting the IRS website,every prize is supposed to be filed,no matter what the value is.Did the Cast Member give me incorrect information?The release form I was given stated the value of the prizes was $67.50.I have alredy filed my tax return and do not want to go through the hassle of re-filing my return for a $67.50 prize!If I had known the prizes had to be claimed,I would have refused them-not worth the trouble of claiming them.I think I will contact Disney and find out if the Cast Member gave me correct information.If I am supposed to claim them,I am going to see if I can just return them to Disney.Does anyone else have any more information or advice?Thanks.