The "T" Word

So what happens if you really do win "the big one" or even a medium one? Most of the time, small wins just show up in the mail. You may receive an email to let you know that it's coming, but often it's a complete surprise. My husband knows that if it even LOOKS like it could be a prize, he should not open it. If you win a large prize, however, you will probably know ahead of time and that's because of the "T" word--taxes. You will most likely receive a phone call or email, possibly even some sort of special delivery (overnight mail, etc.), setting you up for verification of information for the purposes of tax reporting. You should expect to have to fill out forms and visit your notary and have all paperwork returned in a couple days or so. Currently, prizes worth $600 or more in value are required to be reported by the sponsor and you should expect to receive a 1099 in time to do your taxes. The value of the prize is treated the same as regular income, regardless of the prize. This could be good or bad. There are people who think winning the HGTV Dream Home would be an amazing thing, but personally, I wouldn't want that value added to my wages at tax time. On the other hand, I've heard of people not entering contests over $600 to avoid paying taxes. I think that's as silly as turning down a $600 bonus from my employer! My tip of the day for you is to think through what a particular prize would be worth to you in light of its tax burden. My trip to Iceland barely had an effect on our taxes that year because of our total situation, but most trips to Disney World are not attractive to me because I could do better as a Florida resident than the tax burden would be worth.

I didn't have to search long to find a sweepstakes of the day that would be worth the tax burden, at least in my opinion. Go here to enter for the big prize at HGTV. They and their sister sites run great sweeps all year long, and if you check the box on the entry form, they will let you know about each new one as it begins. Happy Sweeping!