Ask An Accountant- 7/22

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Each week Mom On Dealz brings us a great post, answering accounting questions!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an accountant”.
Question:
In 2010 I won an all expense paid trip as a prize for winning a contest. The company immediately asked for my social security number for the purposes of taxes. I expected I would be responsible for taxes on the value of the trip (I think it was $1,800.00.) In February of this year I contacted the company to see if they were sending me a 1099-Misc so I could file my taxes. They said they were going to send the form by the end of February, but I never received the forms. I needed my tax return funds, so I went ahead and filed my taxes without their information. If they claimed my trip on their taxes for 2010, is it likely that the IRS will see that I didn’t claim the trip and come after me tacking on interest?

Answer:
Technicallly you should have reported the fair market value of the trip ($1800) as other income not subject to self-employment tax. The IRS guidelines state that if you knowingly receive income in any form, you are required to report it in the year it was received even if you do receive a 1099.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

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Comments

  1. I love this feature. What a great service. I’ll be following your blog so that I can return for the next Ask an Accountant.
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