The vacation is supposedly worth $7k, plus $1k spending. I've done the math and if the whole thing is taxable than it's about $3200. I could buy the vacation for less than that! Is the whole thing taxed as income or just the cash portion?
2006-09-19 05:10:55 · 14 answers · asked by Jane M 1 in Business & Finance ➔ Taxes ➔ United States
It should be included as "Miscellaneous Income' on line 21 of your 1040 tax form. You will most likely receive a form 1099Misc from whoever you won the prize from. This kind of looks like a W2, but shows taxable income other than wages. Even if you don't get this form, you still need to include the amount on your return.
Be careful that you don't walk into the "gift' trap. Gifts are taxable to the giver, not the recipient. Prizes are a different animal alltogether and are most definitely taxable to the winner. I have attached the appropriate IRS publication.
2006-09-19 08:44:11 · answer #1 · answered by Katie Short, Atheati Princess 6 · 0⤊ 0⤋
you should receive a 1099 MISC by the end of January from the place you won the trip. Even if you don't receive any tax statement from them, you need to declare the FMV (fairmarket value) of the prize won as income. Depending on how much that increases your income and how much you can deduct, (itemized expenses or just the standard deduction) I am not sure about your math since I do not know your income, credits or what deductions you may take. You should check out IRS publication 525 on the section explaining other income I hope this helps :)
2006-09-19 06:07:19 · answer #2 · answered by dragon_jadedeyes 1 · 0⤊ 0⤋
I am curious as to why you expect to be taxed at a 40% rate for this vacation.
Yes it is taxable - the whole thing, trip and cash. You will probably be issued a 1099 form for the value of the prize which you would list on your 1040 form as income.
2006-09-19 08:01:04 · answer #3 · answered by nova_queen_28 7 · 0⤊ 0⤋
Hmmmm....I believe that you have to pay tax on the VALUE of the vacation. What is important here is that although they SAY the vacation is worth $7,000, if you can find the same vacation for a lower price, you would only have to pay tax on the lower amount. So document, document, document - and have fun!
2006-09-19 05:54:31 · answer #4 · answered by RT 5 · 0⤊ 0⤋
I'm not positive, but I believe you have to pay taxes on the whole thing. If you have an accountant, give him a call. If not, call H&R Block-they'll probably tell you over the phone for free.
2006-09-19 05:13:30 · answer #5 · answered by Laurel 3 · 0⤊ 0⤋
Yes, you do have to pay taxes on the whole cash worth of the prize. In this case - $8000.
2006-09-19 05:12:52 · answer #6 · answered by Justsyd 7 · 0⤊ 0⤋
Yes you would have to pay taxes on the whole amount. Just say no to the prize
2006-09-19 05:17:49 · answer #7 · answered by curious george 5 · 0⤊ 0⤋
of course you would because these awards are some how fake. For example if you won this vacation then you should pay some other things that they can get their money back.
2006-09-19 05:15:22 · answer #8 · answered by Anonymous · 0⤊ 1⤋
The whole thing is taxable. Anything you win, whether in cash or prizes, (including vacations) , are considered taxable by the government. Good Luck ! :)
2006-09-19 05:13:09 · answer #9 · answered by tysavage2001 6 · 1⤊ 0⤋
You pay taxes on the $8000.
2006-09-20 06:25:59 · answer #10 · answered by Steve R 6 · 0⤊ 0⤋