Originally Posted by Marathon Man
I got a tax of $1 on every 1000 miles I earned from Sprint. 50,000 miles would have been $500 bucks.
Now, they gotta report to the same IRS... why is it so different?
Because Sales/Excise tax is completely different from Income Tax.
Originally Posted by Marathon Man
I would so fight this! At leastto reduce it.
Or, send the award back and tell them where the sun dont shine.
Shoulda thought of that when reading the terms and conditions of the contest, and the fact that by entering the contest, you accept those terms.
OP - yes, it certainly diminishes the value of the prize in these days of lower fares, but if you truly believe the value of the 50K miles is less than the $400'ish in taxes you will owe, I'm sure you can return/refuse the prize.
The only other alternative I can think of is proving what you actually use the miles for. The fact that you
can blow it on $200 worth of tickets isn't sufficient. But if you did go and book coach tickets selling for $99 at the time you use the miles, and have the documentation, and take the flight, then you have an arguement. But you will also be out 50K miles for $200.
While I agree with you in principle, folks at AA will have better things to do and will point out that the value was printed on the entry form. Your other path is with the IRS, and they aren't known to be very flexible in reducing your tax burden. And engaging a lawyer would probably burn any possible tax savings in about a 1 hour consultation. And I can't think of alternatives.