Another frustrating win
- Thread starter eran2011
- Start date
Your outcome is why I tend to steer away from prizes that are trip/travel related. Some even offer no transportation and they seem to inflate the value of the prize. Trust me, you will get a 1099 for the full stated value. I dont even know if you can transfer it to someone else. Good luck.
To my understanding it's taxed as normal income, so the tax amount is in accordance with your highest bracket.
Little off the question but even if you won cash towards the taxes, wouldn't you still have to pay taxes on the cash you are given?
That's true. The highest tax bracket might be as much as 37%. I don't know many people that fall into that bracket. 36% of $3600 would be tax of $1296. Now the average tax % that most people pay after standard deductions is usually 24%. A lot less if you file with deductions. So 24% tax of $3600 would be $864. I would just be careful with estimating this as you could be mistakenly declining a nice trip for a small fraction of the trip value in tax.
If you won a really big prize where that came into play, usually tax is paid by the sponsor before receiving the prize so that you don't get surprised with the tax bill.
professortofty
Active member
I too tend to avoid sweepstakes like this with no cash alternative or supplement. I agree that the tax amount does seem high for that value.
I live in NY so state tax and even local taxes also come into play. At best, I might be able to get a fixed 30% rate, which still brings me to $1,200...
Since you've already declined, this is a bit of a moot point, but... I have won trips in the past, and the best advice I received about the stated value versus taxes is to keep all receipts from your trip. For anything mentioned in the prize description, keep the receipt. If the sponsor is doing the trip booking for you, ask for a full accounting once everything's booked and paid. That way, when you receive the 1099, you can check it against your receipts. If the 1099 says $3,600, and your receipts show that, in reality, the trip cost $2,400, you can dispute that when you file your taxes. Receipts are the IRS' "love language" so if you've got them, they'll accept those as proof of the lower value (and thus, lower tax liability) for the prize.
I once won a trip that the sponsor stated was in excess of $17K. I kept all records of current airfare, hotel, etc. It came to $9,887. That's what I claimed as income on my income tax that year. Never had an issue.
Since you declined, I don't think you will have to deal with anything.
I agree with all of the previous comments about trips and keeping receipts. Often the stated value of the prize is an estimate, especially if airfare is part of the prize. Airfare is drastically different depending on where you live. The estimated airfare value is almost always much higher than the actual amount paid. It can be tricky if part of the prize is a meet and greet with a famous person. I have seen crazy estimates for these.
Was the company asking for taxes to be paid before you went on the trip? Someone else mentioned a few weeks ago that Disney was asking for taxes even before leaving. I find this odd. I am hoping this isn't a new trend. I've only had to deal with taxes at tax time after I enjoyed the win.
Congrats on the win. I'm sorry you had to turn it down.
Was the company asking for taxes to be paid before you went on the trip? Someone else mentioned a few weeks ago that Disney was asking for taxes even before leaving. I find this odd. I am hoping this isn't a new trend. I've only had to deal with taxes at tax time after I enjoyed the win.
Congrats on the win. I'm sorry you had to turn it down.
Prizes get added ON to one's individual income. It is not a stand-alone transaction.
Yikes. I was afraid of what you've mentioned. I am finally taking my Omaze trip in July and I noticed that the trip is already going to be above the prize's stated ARV. I was hoping it would stay at that price no matter what.
I won a prize which was a new line of clothing valued at $3100. They couldn’t even guarantee that they could send me my size in the clothing and it was also a style that I would never wear ( like spray painted clothing 
) after I found out that I would have to pay Federal and State taxes (almost 30% of prize value, I declined) I feel sorry for the people who accept these big prizes without realizing they have to pay taxes later on.
) after I found out that I would have to pay Federal and State taxes (almost 30% of prize value, I declined) I feel sorry for the people who accept these big prizes without realizing they have to pay taxes later on.ajsweeps888
New member
Are they making you pay upfront for a withholding or in your next return? Also, what race? If it's the 500, you can probably make that money back selling it.
What a buzzkill though. Worse than simply not winning it.
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mirynika
Active member
I won a trip to London in 2019 and never had to pay taxes on it. I never got a 1099 either. $1500 sounds really high for taxes! Wonder if it's some kind of scam?