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Thread: Tax question about prize money

  1. #1
    DSpitler's Avatar
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    Tax question about prize money

    Since fishing is a sport I thought this would be the place for this question.
    As tournament director for a large bass fishing club I set the prize pool payout scale. These tournaments are 2 man teams with 60 to 80 teams per tournament. 1st place pays in excess of $1000.
    My question is:
    At what dollar figure would I be required to issue a 1099?
    "Be more concerned with your character than your reputation, because your character is what you really are, while your reputation is merely what others think you are."

    Coach Wooden

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    I would guess those are state to state laws, I know at the casino's I've been to in Nevada it was anyting over $1199 I believe.
    I thought coin flip meant you win some of them

  4. #3
    The limit for reporting on a 1099-MISC is $600 or more. I have no idea if a 1099-MISC is appropriate in this case. I know that your club would need a TIN to issue 1099-MISC forms.

    If it was gambling, then the form would be a W-2G. It seems to me that the person who wins it is obligated to report it as income, but it is much less clear that your club has an obligation to report it.

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    nukeduke's Avatar
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    I have no idea if a 1099-MISC is appropriate in this case
    It would be if reporting is required. The reciprient would report the income on Line 21 and be sure not to pay SS tax. I'm checking on the requirements for Arkansas. Not sure how quickly I can get an answer but I'll post here if I get it. I'm a little busy.

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    nukeduke's Avatar
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    Prizes of more than $600 are to reported in Box 3 of a 1099-MISC. If it were gambling the threshold would be higher and have additional factors. I don't think fishing tournaments are considered gambling.

    Here are the instructions to the 1099-MISC.

    File form 1099-MISC, Miscellaneous income, for each person to whom you have paid during the year:........

    .....any person who received at least $600 in rents, services, prizes and awards, etc.

  7. #6
    nukeduke's Avatar
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    Quote Originally Posted by Muttly
    I would guess those are state to state laws, I know at the casino's I've been to in Nevada it was anyting over $1199 I believe.
    1099's are Federal forms and actually have nothing to do with state laws. The states themselves may have different laws regarding required withholding for state related payments though.

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    rocketplayer's Avatar
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    I concur with Nuke's findings
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    DSpitler's Avatar
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    Thanks guys.
    Since prize values are based on the number of entries I think we will program our spreadsheet to limit the top prize to $1198 for the team and issue separate checks to each team member in the amount of $599.
    "Be more concerned with your character than your reputation, because your character is what you really are, while your reputation is merely what others think you are."

    Coach Wooden

  10. #9
    nukeduke's Avatar
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    Quote Originally Posted by DSpitler
    Thanks guys.
    Since prize values are based on the number of entries I think we will program our spreadsheet to limit the top prize to $1198 for the team and issue separate checks to each team member in the amount of $599.
    That will certainly cut down on a little work on your end. Might not be a bad idea to remind them that the prize money is considered taxable income. Whether they report it or not is up to them.

    I used to manage a restaurant in the Memphis area and Jimmy Houston had a home nearby. He came in quite a bit and was a nice fella. I never got the invite to go fishing though. . I hated that job.

  11. #10
    rocketplayer's Avatar
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    I always love the people who tell me they don't have to pay tax on such and such income becuase they never received a 1099.
    There's no certainty only opportunity

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