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Asked this question in an accounting class in college. Professor said if its income its taxed. So as a professional skier who wins a contest, that is technically income. Which will then be taxed. But of course depending on which country you are a resident the tax laws can vary.
dyyylanProbably not, though, unless you're a pro. You have to spend a lot to make itemizing your deductions worthwhile
That's why I said PROOOOOOOOOOOOOO, then you can put it on Sch. C as business income and expense.
cultraraIf you get a cash prize, you it would only be taxed if you report it as income. I'm sure some people choose not to report it.
If you choose not to report it then you might or might not get boned with an emphasis on probably will.
In the USA, the host of the comp is required to issue/file a 1099 for all payouts over $600 so the IRS will have a record of the transaction and you'll get a computer generated matching error notice when your 1040 comes through without the income on it.
If the comp is a bunch of bros who put cash into a hat then handed the hat to the winner then you might not need to worry about the matching issue.
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Yeah if it's a major comp with "real" sponsors, you can bet your ass they're claiming the contest winnings as a business expense, so they're submitting it to the IRS
Unless its big money you could probably claim winnings against expenses. I'm assuming as a pro skier you are considered self-employed, so you could say that it cost "x" amount to travel to said contest and hotel bill etc and by winning the contest you only made the same amount, not strictly legal but whats self employment without abit of tax manipulation?...
eheathThat's odd, I dunno how they don't get audited for that, alot of untaxed income.
My completely unresearched, pulled out of my ass, assumption is that USASA is a non-profit organization that doesn't care too much about filing 1099s for their prizes paid out. A for profit entity will want to accurately file 1099s so they can deduct as much expense as possible to lower their taxable income.
On the other stuff, eHeath and Molson are right on. It is worth clarifying the difference between having tax withheld from your winnings and paying taxes on your winnings. You can have the entire (gross) amount of your winnings paid to you, then file your taxes at the end of the year and have to pay the tax back to the government. In general, when you receive a 1099 it is a good idea to take a portion of that income and set it aside for your tax bill at the end of the year (because nothing has been withheld at the time it was paid to you).
JibbaTheHuttUnless its big money you could probably claim winnings against expenses. I'm assuming as a pro skier you are considered self-employed, so you could say that it cost "x" amount to travel to said contest and hotel bill etc and by winning the contest you only made the same amount, not strictly legal but whats self employment without abit of tax manipulation?...
This is completely legal and what you should do. It all goes on a Schedule C. It is only illegal if you are putting expenses on that aren't "ordinary and necessary" to your profession. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
you should cause it's income but the government isn't going to come after you unless you're making a lot of money from it I'd guess. ski instructors are supposed to claim their tips but I doubt anyone ever has.
