You’ve just received an alert notifying you that you have a new email. You go to check your inbox and time freezes for a moment. You have just won an all expenses paid trip for you and a friend to San Diego Comic-Con! This is a glorious day, right? **** yeah it is! You’re the lucky one to get picked out of thousands of hopeful entrants and you are headed down to the action for a no-so-relaxing full weekend of fun in the California sun!
Well, you’ll get glimpses of the sun from time to time. YOU KNOW WHAT I MEAN!!!!!!
So you go on your trip and have an awesome time and relive your favorite memories while talking to all of your friends who have never been (and just dont quite understand what you experienced) for a few months. Next thing you know, it’s January (AKA the middle of SDCC planning season) and you get a funky little letter in the mail.
What is a 1099-MISC you ask? Let me tell you. or rather, let me copy and paste the definition for a website that looks like they know their info.
A 1099-MISC form is used to report miscellaneous income to the IRS. This form is used for:
Income earned by an independent contractor but not an employee
Fees, commissions, rents, or royalties paid
Payment for prizes, awards, or legal services
Excess golden parachute payments
Medical and health care payments
Yeah, you remember when you entered the contest there was a little link for the rules? Did you look at it? Did you see the little bit about “ARV = $XXXX”? If you missed that part, the “ARV” stands for “approximate retail value”. And guess what? The ARV is now, in the eyes of Uncle Sam, taxable income that you received and now when it comes time to file you owe him his cut of that Comic-Con experience. And trust me, Uncle Sam doesn’t want compensation in the form of your bag filled of obscure flyers and other con swag that you keep in the corner of your closet. No, he believes in Money Over Everything as the rappers would say.
Not just him too, his cousins “State” and “Local” also need to get in on that sweet untaxed income. What? You ask “What if I decide not to file your 1099-MISC when tax day comes?”
They already have a copy of the form. The prize provider sent one to you as well as covering their behinds by sending one to the feds as a way to write off your prize from their income as a “promotional expense”. They pay less taxes and you need to pay more! Crazy, right? You will get hit with penalties and what have you if you fail to do this and they catch you.
I’m not here to kill your buzz and prevent you from entering just to better my odds. I already won a Comic-Con contest once and we here at When Nerds Attack just wanted to share the info in terms that are relatable. So be sure to look over the paperwork before you enter any contests and decide for yourself if this is something you’ll want to deal with later.. Yeah, it’ll be cool as hell to win but some people cannot afford to lose out on their tax return or even have to owe several hundred dollars to the three muggers. I mean government types.
Just be happy old people don’t rob you too, what with their Social Security and Medicare.