Thoughts and Riches

.....a blog about personal finance, motivational stories, deals, and special offers

Web Domain Registration
Go Daddy $12.99 Turbo SSL Sale!
Get Started Now
Tuesday, July 29, 2008
Sweepstakes winner .... or loser?
Every once in a while, I enter sweepstakes. Recently wanted to find out about the tax implications of winning a sweepstake. As happens with most of the money we all get, IRS wants to make sure it gets it share - the same principle applies to sweepstakes winnings which are taxable. What's worse is that sometimes you may have to pay taxes even if you don't make use of the award.

As per article by Ric Edelman, a winner of a TV game show accepted the offer for a cruise worth $8,000. However, as her husband fell ill, she couldn't take the trip. Unfortunate? Yes, but what was a double-whammy for her was that in January, the TV producers sent her 1099 for the value of the trip. Result? She owed federal and state income taxes.Why?
She agreed to go, and that’s what triggered the tax liability; the fact that she didn’t go is not the producer’s (or the IRS’s) problem.

People who win raffles, lotteries, and prizes on game shows often don’t realize that their winnings are considered to be taxable income. Worse, when the prize is an appliance, car, furniture, or vacation, the producer issues a 1099 based on the full retail price, even though the item can often be purchased from retailers at a substantial discount.

Before accepting a prize, make sure you truly want it. Is it worth the taxes you’ll have to pay? If yes, be prepared to receive a 1099. But before you pay the tax, shop around and obtain quotes for the actual fair market value, for this figure will often be less than the manufacturer’s suggested retail price (which is likely the basis for the amount on the 1099). By enlisting the aid of a talented tax advisor, you’ll be able to reduce the tax liability on that prize.
Ric Edelman sums his opinion on entering sweepstakes etc pretty well when he says:
I hope you can “afford” to win
For details, see::

Ric Edelman: Should You Accept the Prize You Just Won?


posted by Ruby @ 9:26 AM  
Post a Comment
<< Home

See important Disclosure and Disclaimer

Favorite Quote
"If you look at what you have in life, you will always have more. If you look at what you do not have in life, you will never have enough".
                - Author Unknown
This site uses cookies from companies like Google and others to enable the companies to deliver their services, personalize their ads and product offerings, and for traffic analysis. Information about your use of this site is shared with these companies. By using this site, you agree to its use of cookies. Additionally, this site, including blog posts, may contain reviews, links, banners, text and other forms of advertisements for products, services, courses, and so forth of companies of which we may be an affiliate member or for which we may get paid for referrals. This site may also contain blog posts for which we are paid, as well as blog posts regarding products or services of companies from which we may have received complimentary products or services.
Reward Surveys/Panels/Shopping/Contests
Kellogg's Coupon Newsletter - Take Control of Your Money
Protect Your Computer Files
Job Search site
Indeed Jobs
Yahoo! HotJobs - Job Postings
Credit Cards
Best Western Canada Credit Card - 20,000 rewards points: Apply Now!
Apply Now!
Health: eHealthInsurance
Phone Service
Investing 120x120 Best Seller Giveaway
Find the perfect babysitter at
Previous Posts
Favorite Charities
Disclaimers, Privacy Policy, and Disclosures
  • Disclaimer, Privacy Policy, and Disclosures

  • Third-Party Offer Disclaimer
  • Subscribe to Blog Posts
    Add to Google Reader or 

    Bookmark this blog site
    Contact Me


    Web Site Link Exchange

    Link Exchange

    © Thoughts And Riches proudly powered by Blogger.