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31 jan

Questions Regarding Taxes on Sweepstakes Prizing

By: Sync Marketing | In: Ask Sync, Ask Sync Marketing, Best Practices, Sweepstakes

February is the beginning of tax season so we thought it fitting to address some questions that we’ve received from winners and clients alike regarding paying taxes on sweepstakes prizing.

How will I know if I will have to pay taxes on a prize?

Any prizing that you win that totals over $600 in value will be reported to the IRS, and you will receive a 1099 for the tax year in which you accepted the prize. During the process of accepting a sweepstakes prize, you will be asked to fill out and sign a W9 form, so this will be your first indication that you will have to pay taxes on your prize. The amount of taxes that is paid is based on the individual, so it is recommended that you speak with a tax professional to determine what your taxes will be before you accept the prize.  Here is a good article about prizing and paying taxes: http://www.marketwatch.com/story/you-win-and-now-you-owe-taxes-2014-03-12

How do I determine the ARV on a prize for tax purposes when running a sweepstakes? 

We are often asked by our clients to determine the approximate retail value (ARV) of a prize for a sweepstakes. If the prize is an item that is sold by our client, that is the manufacturer’s suggested retail price, which we use to determine the ARV. If, however the prize is a service or trip, we do our due diligence to research the average price of the trip elements to ensure that the ARV is on target.  For more information, see our previous blog article about ARVs here.

What if I accept a prize such as a trip but end up canceling at the last minute? Do I still have to pay taxes on the prize?

Ultimately this is up to the sponsor of the sweepstakes. If the trip elements were already booked and paid for by the sponsor, they will submit a 1099 to the IRS for the advertised ARV.  However, if there are elements of the trip such as food or ground transportation at your destination that wasn’t pre-paid, you could dispute the ARV since those elements were never purchased by the sponsor. Here is an article about taxes on vacation prizes.  http://contests.about.com/od/vacationsweepstakes/f/Which-Taxes-Do-You-Pay-On-Vacation-Prizes.htm

If you are a client thinking of running a sweepstakes or if you have additional tax questions, please contact us at info@syncmarketing.net.   


15 apr

Feeling Blue this Tax Season? – Enter these Tax Sweepstakes for a Chance to Win Cold Hard Cash Prizes

By: Sync Marketing | In: Contests, Sweepstakes

Happy Tax Day?  If you need a distraction from the reality of what Uncle Sam might be taking from your wallet this tax season, check out these online tax sweepstakes that offer winners cash money as prizing.

PACIFIC SEAFOOD “BLUE IS THE NEW GREEN” INSTANT WIN GAME

Pacific Seafood’s Blue is the New Green Instant-Win Sweepstakes is awarding daily prizes to winners. Enter and you could win some awesome prizes including Amazon gift cards, and cash prizes worth up to $10,000!

#IAMUNEEK PHOTO CONTEST 2015

Entrants are asked to take interesting and creative shots of UNEEK shoes for a chance to win weekly cash prizes in the Keen Footwear’s #IAMUNEEK Photo Contest. Plus, one lucky grand prize winner will be chosen to receive an additional $5,000!

NASCAR XFINITY SERIES™ $100,000” SWEEPSTAKES

Enter the NASCAR Xfinity Series $100,000 Sweepstakes, you could be one of four people to win a free trip to the NASCAR Xfinity Series Darlington Raceway Race. Plus, one of the final four will receive an extra grand prize of $100,000 in cash!

Alright, we might admit that entering a tax sweepstakes with the hopes of winning cash may not be enough to take the sting out of tax day, but it’s always worth a shot.  If you are a business planning to run a sweepstakes in 2015, check out our blog article with some helpful tips to ease your winners concerns this time next year.

 

 


10 apr

Keeping Winners Happy – Even During Tax Season!

By: Jennifer French | In: Best Practices, Contests, Marketing, Sweepstakes

Since we are almost down to the wire for the end of tax season, I thought it fitting to bring up a few thoughts about sweepstakes prizing and paying taxes.  Yes, the reality is if you host an online sweepstakes or contest and offer consumers the chance to win exciting and sometimes expensive prizing, Uncle Sam will be waiting to receive his fair share from the winners come April.  Despite this, running a sweepstakes or contest is a great way to engage and excite consumers, and if you keep the few items below in mind, there won’t be any surprises at tax time and your winners will walk away with positive feelings due to their winning experience.

  • Clearly outline in the official rules that the winner is responsible for all taxes and fees associated with the prize.
  • Provide the potential winner with an affidavit of eligibility and release form that again reminds them that if they agree to accept the prize, they are responsible for all taxes and fees associated.
  • Suggest that the potential winner speak to their tax consultant regarding their personal financial situation and what accepting the prize will mean to them.
  • Refer them to http://www.irs.gov for more information on paying taxes on sweepstakes prizes.

These are just a few suggestions, but my number one recommendation, if your budget allows, is to offer a cash prize to offset the winner’s taxes. Your gesture of providing cash to ease their tax burden will go a long way!  Ultimately, the main reason you run sweepstakes is to engage and reward  new and current consumers, so make sure that in addition to their great prize, you reward them with the best possible experience.

 winning