If you win a ticket to the Met, they inform the IRS
mainAn alert reader has directed us to an interesting post on the Opera-L list.
The Metropolitan Opera, writes Michael Liebert, has a donation that funds 200 cheap on-the-day tickets on a first-come, first-served basis. The Rush Ticket program (usually $25 for an auditorium seat), does not publish the names of lucky winners. But it does inform on them to the tax man. Read Terms and Conditions:
The drawings are open only to natural persons who are United States citizens or legal residents of United States or Puerto Rico, are at least 18 years of age and who submit an entry from within the United States or Puerto Rico….
The Winner is solely responsible for reporting the prize as required by law and making all federal, state, regional and local tax and other payments, including without limitation, income taxes and sales and use taxes in connection therewith. The Met will file a Form 1099-MISC with the IRS disclosing the fair market value of the prize if required under federal tax law.
(Who’s being watched by that man in the overcoat?)
I don’t quite understand that release. If a US citizen wins a prize valued at $25, do they have to report that on their tax forms? I have no idea about US tax law but I would have assumed the minimum is considerably higher than just $25!
Then, the ticket costs the purchaser $25. Yet the Met may file a form disclosing the “fair market value of the prize.” Surely this does not mean that a $25 seats winner receiving a ticket normally sold for, say, $125 might have to pay tax on the higher amount? Seems odd to me.
US taxpayer here. I’m no expert but I find this bizarre – surely a $25 in-kind gift wouldn’t be worth reporting. I honestly wouldn’t know where on a tax form to put a $25 ticket that was won in a contest. Under “winnings from gambling”?? I mean really?
A Form 1099-Misc is also required for certain types of income, namely that received when working in the capacity of “independent contractor” as opposed to “employee,” about which I’m sure nobody wants to hear a dissertation (which is what’s required to provide an adequate explanation of the difference).
But the major point here is that the need to issue a 1099-Misc on income is only triggered by receiving $600 or more from a single payer, and although one doesn’t want to bet the house on anything in the US tax code making sense, I believe there is a similarly high threshold for prizes.
This is boilerplate language that anybody awarding any sort of prize has to put into the printed materials concerning said prize, because lawyers. If you’re one of the winners of this drawing, and the Met doesn’t collect your Social Security number at the time, they have no way to report the “winnings” as connected to you anyhow. There is essentially zero possibility that the Met, or anyone else, is actually reporting to the IRS about prizes worth $25.
As to where you’d put it on the tax form, there’s a line for “miscellaneous income” not reported elsewhere.
… Bratschegirl, also: a ticket would never constitute “income” anyways.
But what confuses me is the phrase “disclosing the fair market value of the prize.” Surely the fair market value of this “prize” is US$25? So why cloud it in ambiguity unless that “value” is substantially more and has been marked down to $25? In which case, how does the “winner” know what value to report?