I know a person who won $50.00 gift card from Visa/Eprize. Visa/Eprize said they would send you a 1099 at the end of the year. However, I know Visa/Eprize is wrong in sending the 1099 to the irs for $50.00 Prize over $599 are to have a 1099. So what form do I need to tell her to get to correct the error on visa/eprize part. This person did not provide a SS# or tax id# to VISA/Eprize. She is thinking of sending the prize back and refusing it. Thank you for any advice.
2007-02-10 07:18:20 · 2 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Visa wouldn't be wrong to send a 1099, they just aren't required to send one (you hinted at this fact; under $600, they aren't required to issue a 1099, for $600 or more, they are required to provide one).
If your friend did receive the prize, she should still claim it as miscellaneous income, even without a 1099. As for the SSN/TIN issue, I'm sure Visa has the means to get her information, especially if she is an account holder.
2007-02-10 07:56:36 · answer #1 · answered by nick_g22 3 · 1⤊ 0⤋
It's taxed at your marginal rate as ordinary income.
Just to correct a misconception on your part, though. Form 1099 is mandatory on all payments of $600 or more. There is NOTHING to stop a payer from cutting a Form 1099 for lesser amounts.
The $600 threshold was set to reduce the administrative burden on having to cut numerous Forms 1099 for small payments. It does NOT mean that payments of $599 or less are non-taxable, only that reporting is not mandatory on the part of the payer.
She can refuse the prize and return it if she wishes to though it woud be silly to do so as the tax is less than the value of the prize.
2007-02-10 07:50:10 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋