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Sweepstakes and Taxes

danica

We want to wish everyone a very happy new year for 2015! A new year also means tax season for us all. But what do taxes and sweepstakes have to do with one another? We'll get into that a little later, let's talk about a great Tax Act giveaway first! The total approximate retail value of the prizes is $17,600. Click the link above to enter.

There will be a total of six winners, as follows:

1). The First prize winner will get an all expense paid vacation for two to see the Daytona 500 live on February 22, 2015 at Daytona Beach, Florida. Also, they will get behind-the-scenes VIP Passes

2). The second prize winner will receive an autographed uniform by one of the drivers worth ARV $4,000.

3). The third place winner will get a matching balance up to $2,500 depending on your tax IRS refund or for the balance due on a TaxACT e-filed Tax Return.

4). The fourth place winner will receive an autographed shirt by a crew member worth ARV $500.

5).  Two fifth prize winners will each receive an autographed piece of race car sheet metal worth ARV $300 each.

Now, let's talk about how sweepstakes affect taxes. Tax season is especially difficult for us sweepers because we have a lot of extra income but aren't sure exactly what to do with it when it comes to filing with the IRS.

Do I need to pay taxes on prizes I win?
 
Yes.  For prizes with values under $600, the sponsor will generally send you the prize and let you assume the responsibility for reporting it to the IRS.  For prizes over $600 in value, a sponsor will send you an affidavit.  In January, you will be sent a 1099 form with the prize value stated so that you can include the prize as taxable income when you file your taxes.
Please feel free to comment and share your experiences, we'd love to hear from you!

This Post Has 15 Comments

  2. Sue King January 20, 2015

    What should you do if you don't get an affidavit ? Do you know what percent we have to pay on our wins in MN ?

  3. Pamela Meek Murphy January 20, 2015

    Another fact is that if you are getting health care subsidies/credit through Obamacare that it is counted as income and you may end up having to pay back part of your credit so be sure to let your elected insurance company know about big prizes so they can adjust your credit accordingly.

  4. Sweepstakes Advantage January 20, 2015

    Hey Sue, unfortunately I do not have that figure with me, but that would be something great to bring up to your Tax Preparer. If you're doing it by yourself, I would seek council of a PA or do some research online. January still isn't over yet so the affidavit might be on its way.

  5. Sweepstakes Advantage January 20, 2015

    Now that's an interesting tidbit of information that we were unaware of. We cannot comment on it due to it being unrelated to giveaway prizes, but definitely appreciate you sharing that so others can be aware.

  6. Sweepstakes Advantage January 20, 2015

    Thanks Shelley and you're very welcome! We want everyone to know that there are always questions when it comes to income so it is good that you've read this to help you prepare your yearly tax review.

  7. Ken Carlos January 20, 2015

    You mean to say the Obamacare credit isn't actually free? Shocker… Thanks for the tip. 🙂

  9. Sue King January 20, 2015

    Thank you for everything you do for us already and for the input you gave !!

  10. Pamela Meek Murphy January 21, 2015

    I'm already hearing about people that have filed and owe hundreds of dollars. I am still sweating this out since I won that motorcycle and checked the Healthcare.gov site to see what is counted as income. Prizes are income. I'm just praying that the Trust that pays for my healthcare is also going to pay for my penalty of earning too much! Just another way to discourage people from trying to do better, make more money and support themselves. So much for a Free America.

  15. Lisa Lo January 25, 2015

    Got mine deferred til 2016 because I won in Dec. but did not get til Jan.

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