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It\u2019s always exciting to win a prize, no matter how small it is. Winning a big prize can be so mind-boggling that you can overlook a few important details. One of them is taxes. When deciding what to spend your unexpected money on, forgetting about taxes can do you a disservice. In just a few months, you may be hit by a truly unanticipated expense.<\/p>\n
The IRS is waiting for you to share your prize<\/a> with it. No matter how unfair it might seem, this is the USA law and you must abide. All sweepstakes prizes<\/a> are subject to taxation regardless of their size and type. For example, if you win a TV, you have to pay the same amount of taxes you would in case you\u2019d have won its cash equivalent. Here are a few points to clarify the sweepstakes<\/a> tax paying process.<\/p>\n Many people mistakenly believe that if they\u2019ve won less than $600, they don\u2019t have to pay taxes. In reality, ALL prizes are subject to taxation. If the prize is lower than 0, the contest sponsor may not report<\/a> it on the 1099 form. But you still need to report the winnings and pay the taxes. So don\u2019t count on the IRS to do the job for you. Always be ready to report.<\/p>\n \u00a0<\/strong><\/p>\n Important:<\/strong> Even though the sponsors are obliged to file a 1099 form for prizes over $600, it doesn\u2019t mean they won\u2019t do it for prizes under $600. In case a sponsor files a form and you fail to include the winnings in your tax form, you may be in some serious trouble with the IRS.<\/p>Debugging The $600 Myth<\/strong><\/h3>\n
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