In the Thursday Star-Bulletin, there was a story about a man who didn't accept 108 concert tickets because he would have had to pay more than $1,000 in taxes. But he accepted 17 tickets worth $595, supposedly because prizes under $600 were not taxable. Is that correct? Taxes are owed even
on prizes less than $600No, it's not. The prize winner is going to be surprised because, according to the Internal Revenue Service, all prizes are income and must be reported on income tax returns.
That includes a $50 cash prize or the fair market value of merchandise you might receive.
What often causes confusion is that payers of prizes do not need to send the IRS an information return, such as a 1099-MISC, unless the prize is worth more than $600, said IRS spokesman Tim Harms.
"In other words, if the prize is $1,000, the person paying the prize should file a 1099-MISC with the IRS and send a 1099-MISC to the prize winner," he said.
If the prize is worth $599, the person paying the prize does not need to file a 1099-MISC nor send one to the winner, but the latter must still report the prize as income, Harms said.
More Kokua Line
in today’s Star-Bulletin:
- Applying for elderly housing
- Auwe
- Race watch.
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