I won 2 roundtrip First Class flights JFK-Shanghai on China Eastern. How can I sell?
Nov 16, 2014, 7:08 am
#16
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In what way is it calculated into the deal? Is this why so often there's a 'spending cash' component? Or are you suggesting that the companies sponsoring high-end prizes make some way to cover the taxes incurred? Other than when the lottery gets up in the hundreds of millions, I rarely enter competitions anyway, but had no idea that winning one might be detrimental.
Nov 16, 2014, 1:59 pm
#18
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Nov 16, 2014, 4:44 pm
#20
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Thank you for all of the replies. I was put in touch with a friend-of-a-friend who works for the IRS, and his opinion was "I would suspect that the company would have run the prize through payroll and withheld taxes on it's value."
Nov 16, 2014, 4:50 pm
#21
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If the tickets are worth $20K, OP's income is increased by $20K, but it is "phantom" as he does not have cash for it. If his federal, state, local & FICA taxes amount to 30%, that will cost him roughly $6K in cash he owes to various taxing authorities.
Many people don't claim high-end prizes or they don't pursue their claim once they figure out what it will cost them. Even though paying only 30% of fair market value can be a bargain, that can still be a lot of money to lay it out.
Businesses which manage these giveaways know all this and it is calculated into the deal.
Many people don't claim high-end prizes or they don't pursue their claim once they figure out what it will cost them. Even though paying only 30% of fair market value can be a bargain, that can still be a lot of money to lay it out.
Businesses which manage these giveaways know all this and it is calculated into the deal.
I have gotten upgrade certificates before. They are not taxed. If a non-taxable upgrade certificate is given along with a taxable economy ticket, I would want that.
Nov 16, 2014, 5:24 pm
#22
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Income taxes are withheld for individuals in their name. If this post is at all serious, I would not rely on the opinion of a friend of a friend with whom I was put in touch and who allegedly works for the IRS and suspects certain things.
Nov 16, 2014, 5:31 pm
#23
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You will receive a 1099 from the airline on which they will put the value, likely the full fare in F. This you need to add on your 1040 as misc income. You can ask the airline to provide you with a reduced valuation which they may or may not provide. It can add up.
Nov 17, 2014, 12:00 pm
#24
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PS in terms of your reference to bloggers getting free trips, it is hardly clear as a matter of tax law that they shouldn't be paying taxes on the value of those trips.
Nov 17, 2014, 12:19 pm
#25
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For this reason, many "game" or "lottery" entries are technically limited to legal residents of the US only. (In the fine print)
To the OP, congrats on the win. Hope you either find someone to take them off your hands (I'll gladly pay the ticketing and income taxes on 2 free FC tickets!) or have a great trip yourself.
Cheers,
SF
To the OP, congrats on the win. Hope you either find someone to take them off your hands (I'll gladly pay the ticketing and income taxes on 2 free FC tickets!) or have a great trip yourself.
Cheers,
SF
Nov 17, 2014, 6:05 pm
#27
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You cannot rely on the "advice" of a friend of a friend who allegedly works at the IRS. For all you know, the alleged IRS person does not have any real expertise in this area. The IRS has lots of people working for them and many of them do not have any real expertise in this area of tax. (think clerical staff, engineers, collections officers, etc.) Neither can you rely on the person at the airline. The trip has value, by your own admission. Why else would someone want to pay you for it?
The only person you can relay on for advice on this matter is a CPA that you actually pay to give you an answer. If the 1099 comes in with a $20,000 value, you may end up paying as much as $6-7,000 in income taxes for your "free flight."
Nov 18, 2014, 12:39 pm
#28
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I'm talking of course about the airline tax on the tickets themselves. Like the same tax you pay when you book rewards flight with your miles (on Delta anyway).
When I was in the offices yesterday, I asked about any possible taxes owed to the IRS. The woman I spoke to said these are promo flights with no actual value. Like when an airline employee gets a free flight somewhere. Or when a blogger is given a comped flight to review. I asked if they needed my social security number at any point, and they said no.
When I was in the offices yesterday, I asked about any possible taxes owed to the IRS. The woman I spoke to said these are promo flights with no actual value. Like when an airline employee gets a free flight somewhere. Or when a blogger is given a comped flight to review. I asked if they needed my social security number at any point, and they said no.
Talk to an accountant, not an airline ticket agent or "a friend of a friend...".
Last edited by JDiver; Nov 18, 2014 at 12:48 pm
Nov 21, 2014, 2:35 pm
#30
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Wirelessly posted (BlackBerry: BlackBerry8530/5.0.0.1030 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)
"The only "catch" is you have to pay the $505 taxes on each ticket."
What are those taxes? Government transportation taxes/airport fees/airline surcharges? Unless the airline knows your tax bracket, it cannot possibly know how much you will have to pay in federal, state, and local (if applicable) income taxes.
To whom is the airline going to issue the 1099 form? And what value will be ascribed to the prize on the 1099?
Suggest you consult with your accountant before you do anything with your prize.
"The only "catch" is you have to pay the $505 taxes on each ticket."
What are those taxes? Government transportation taxes/airport fees/airline surcharges? Unless the airline knows your tax bracket, it cannot possibly know how much you will have to pay in federal, state, and local (if applicable) income taxes.
To whom is the airline going to issue the 1099 form? And what value will be ascribed to the prize on the 1099?
Suggest you consult with your accountant before you do anything with your prize.