Do taxes have to be paid on contest winnings? If a person wins a writing contest, is the money received for the work considered earnings? If money is won from from a contest where no work was involved (no writing, painting, or whatever, they just entered and won), how is that to be reported on tax forms?
2007-10-01 07:42:26 · 5 answers · asked by maraso 2 in Business & Finance ➔ Taxes ➔ United States
If the money received was a prize or award given for outstanding educational, literary or civic achievement it is NOT taxable. If it was won in just a random contest it IS taxable and is reported as other income on your return.
2007-10-01 09:10:01 · answer #1 · answered by Dixie P 1 · 0⤊ 0⤋
In either case it's fully taxable. List it on the Other Income line on your tax return. It is not considered earnings so no Social Security or Medicare taxes need to be paid.
2007-10-01 09:43:00 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
I assume you are not a professional writer.
In both cases the winnings are reported on Line 21 of Form 1040 as "other income." The winnings are not subject to Social Security and Medicare tax.
The winnings are added in with your other income and taxes are paid at your ordinary tax rate.
2007-10-01 07:49:00 · answer #3 · answered by ninasgramma 7 · 3⤊ 0⤋
Taxable to federal, possibly your state and city/local too. Report on other or miscellaneous line.
2007-10-02 06:30:14 · answer #4 · answered by Dee 4 · 0⤊ 0⤋
you have to pay taxes on all income. Technically if your parents gave you 50 dollars, you have to count that as income. most people dont because there is no way to trace it. But the people that are paying you from the contest are certainly writing off what they are paying you on their taxes so you will have to pay.
2007-10-01 07:47:54 · answer #5 · answered by Anonymous · 0⤊ 3⤋