Sweepstakes Winners: W-9’s and 1099’s

Posted by Jennifer Hibbs on June 28, 2016 in Articles, Compliance, Legal, Prizes | 42 Comments

42 Responses to Sweepstakes Winners: W-9’s and 1099’s

  1. steve talkington says:

    Do I have to pay tax on a sweepstakes winning to recieve the check for that winning. I don’t have the money to pay up front tax can it be paid later after I get the winning check (2.5m).

    • Jennifer Hibbs says:

      Typically in the US you would only pay taxes on winnings when you file your regular tax return.

      • C says:

        If you win a large sweepstakes prize, what percent goes to IRS for the taxes on it, and what are the legal ways to reduce the amount paid? Please reply!

        • Jennifer Hibbs says:

          Please refer to the above information. All prizes won should be reported to the IRS on your tax form, either with a 1099 or as “other income” if the prize(s) are valued at $599 or less. You would need to consult an accountant or tax professional with any tax questions you have on specific prizes you have won.

  2. Dessa says:

    I have a quick question – There are three parties involved (1) the company donating the item (“Donor”), the business hosting the auction (“Auction”) and the (“Winner”). You use the term Sponsor in your post but it is unclear to me if the Sponsor is the Donor or the Auction? Can you please confirm which exact party has to file the 1099s? If the Donor gives the item to be auctioned to the Auction do they still have to file the forms. Interested to hear your thoughts.

    • Jennifer Hibbs says:

      The Sponsor is the company that is running the sweepstakes. It sounds like your example is not a sweepstakes or contest at all. You would need to consult your attorney as to who is responsible in your particular situation. If you need help and would like assistance in generating 1099s in the future, please contact us as we can help.

  3. Jason Greene says:

    If my son (15) won a contest to travel abroad to attend a professional soccer match, airfare, accomadations, etc totaling $8,500 (approx. value). Will he have to pay tax on this trip or will I? He does not have any income.
    Thank you!

    • Jennifer Hibbs says:

      Check the contest rules. They should state who would be responsible for US taxes if the prize is won by a minor (or even if minors are eligible to enter).If the rules says that if a minor wins the prize it will be awarded in the name of the parent/legal guardian, then the parent/legal guardian would be liable for the taxes. If they say it would be in the name of the child, then you should check with your accountant/tax preparer; professional advice would be required to ascertain if the child should file that amount themselves or if they can file it as a dependent.

  4. T says:

    If you have a winner is from another country win a prize in the US. do they still get a 1099 form or another form?

  5. Stephanie Phelps says:

    We had a raffle and the winner was drawn right at the end of December. The winner was notified via telephone in December and paperwork was sent to the winner for completion. However due to the holidays, the winner did not return his completed paperwork or receive his prize until now in January. Do we issue the 1099-misc for the 2017 tax year or the 2018 tax year as this is the year he actually received his prize? Any advice is appreciated. Thank you in advance.

  6. Alexis padilla says:

    If i win a vacation price but never used the vacation price, do i still have to pay taxes?

    • Jennifer Hibbs says:

      People who win trips that are then booked may be subject to taxes even though they do not take the trip. You should ask your tax accountant.

  7. Whitney Gallaher says:

    I’m currently waiting to receive a prize with the ARV of $17,000. Will I be responsible for paying the FMV tax on it before I receive it?

    • Jennifer Hibbs says:

      No, you have no value until you receive your prize unless it is a prize that is deemed to have constructive receipt and then it might be taxable before you actually use it, like a voucher for airfare. Consult your tax accountant on next steps.

  8. Brittany Addison says:

    I went on a trip for 2 that a non family member won. Do they pay the taxes on the full ARV or do we split it? They had both of us fill out forms for tax purposes.

    • Jennifer Hibbs says:

      If you filled out separate papers, we would think you would get a separate 1099 in January of the year following when you took the trip. You should ask your tax accountant for guidance.

  9. Jeffrey Moore says:

    My son won $22,000 with his basketball team and the checks were sent to him. However, he then sent checks to each member of the team. Each player received $4,400. What does he need to do to send out 1099 forms to each of his team mates and is there a separate form that shows that he distributed the funds so that he does not pay tax on all $22,000.

    • Jennifer Hibbs says:

      That would be a question for your tax accountant and the contest/sweepstakes administrator who issued 1099’s for that program. Good luck!

  10. ALICE Duran says:

    If my wife and myself no longer file a return due income only been social security for both.
    And i win $1000.00 for a cook -off do i still need to file a return to report this income?

    • Jennifer Hibbs says:

      You need to look at how the $1000 impacts your tax situation when combined with your SS income and any interest or dividends you might have. Chances are your personal exemptions and standard deduction is sufficient to offset but you would need to speak to your accountant or try one of the free online tax programs.

  11. Olga says:

    What about prizes that include coupon codes or promo codes to redeem an item and have an expiration date. Are those taxable?

    • Jennifer Hibbs says:

      Hi Olga,
      The short answer is that if it is a prize it is taxable in the US — although you will not get a 1099 if the prize amount is low. This includes electronic gift cards or ecodes that may have an expiration date. Any cents off coupons are not taxed as prizes. When in doubt, especially if you won a prize that you did not get a 1099 for, ask your tax accountant.

  12. Melodee says:

    Are sweepstakes allowed to fill out your 1099 with the ARV if you are only receiving a cash “in lieu of” which is usually far less (ie $700,000 ” in lieu of” a 1.6mil ARV prize)?

    • Jennifer Hibbs says:

      The 1099 would list only the ARV of the prize that you were actually awarded. Per your example, the 1099 should only list the $700,000 if that is the prize you actually received.

  13. When winning a sweepstakes is there an insurance fee that must be paid before the check can be sent out?

  14. Kortnie Jacob says:

    I received an email stating I am a possible winner in a promotion I signed up for and they are requiring me to complete a W-2 and a notorized grand prize affidavit, how can u tell if it’s a scam or really as I am nervous to give my SS# to them.

    • Jennifer Hibbs says:

      If you remember entering the promotion, that is a good start. The Official Rules should state who the administrator of the promotion is so you can look them up and call them to confirm that whoever is contacting you is who they say they are.

  15. Josh Schwsrtz says:

    If the sponsor sends a 1099-MISC, do I have to put that income in that section and assign as business income or can I put it in the other income section and move on?

  16. Orlando Rios says:

    When should I expect my w-9 documents? It do I just file it it my self, and if so where do I send it?

    • Jennifer Hibbs says:

      If you won a prize with an ARV at or over $600, then the administrator or sponsor of the promotion should have sent you a W-9 to complete so they can issue you a 1099 by the end of January of the following year. If the prize is valued at less than $600 consult your accountant as the 1099 will be your responsibility. If you never were asked to complete a W-9 for a prize valued at $600 or over, contact the promotion administrator or sponsor of the promotion.

  17. Tanya says:

    My husband and daughter won a prize trip that includes having the taxes paid. Are there any taxes associated with this other than income taxes? Is the amount the sponsor is paying specifically for income taxes? Does it show up as withholding on the 1099 one receives?

    • Jennifer Hibbs says:

      You would need to consult the sponsor and a tax accountant for how they are handling this. Typically when a sponsor awards funds to offset taxes it is in the form of cash that the winner would need to save to apply towards taxes.

      • Tanya says:

        In this case, they had said they were paying to the IRS. I was not really wanting to hire a tax accountant as we normally do our own taxes, so I was trying to figure it out. Thank you that you were so quick to respond to my question. 🙂

  18. Mya says:

    Hi I recently entered a giveaway to receive an iPhone and air pods, the guy I am contacting is telling me that I need to fill out a W9 form, I don’t feel comfortable giving it out nor my social, what else can I do? So that I can still receive the prize?

    • Jennifer Hibbs says:

      Prizes with a high retail value like that are legally required to have a 1099 issued to the recipient by the IRS. It sounds like the program administrator is just following legal guidelines. If you don’t give that info, most likely they can’t release the prize to you and will move on to someone else.

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