how do we report the winnings? As winning? As self employed? What Box works for non employee comp stupid online stuff asking me ifts a c blah blah blah
I have my taxes done for me…but I know some people do it as freelance work or contest winnings.
Slogana, you probably should ask a tax expert this question because, from discussions we have had here before, it may be true that winnings are treated differently than 1099 contractor/freelance work income. I personally incorporate my earnings into my business because I’m already a freelance/contractor on 1099 work. I have never specifically asked my tax guy this question.
First of all and most importantly, it not winnings, it’s treated as income. After you understand that, the rest is easy.
[quote=“Arnet, post:4, topic:2500”]
First of all and most importantly, it not winnings, it’s treated as income…[/quote]
Arnet is correct - If you made enough $$$ to be issued a 1099, then those earnings are reported (by SH) to the IRS.
Your 1099 earnings should be reported on your tax return as “additional income” if you made enough money to file a tax return.
If your SH earnings are your only income, then you can go online to determine the minimum amount needed to file a tax return.
Your earnings here are NOT classified as “winnings”. You must classify yourself as a self-contractor when filing your taxes. ( I have clarified this with my CPA ) Not happy to find out the chunk I had to pay to IRS vs. being classified as “winnings earned” lol Definitely a different percentage owed.
That’s because you have to pay “self employment tax” on top of regular income tax. Self employment tax is for Social Security. If you worked for an employer, it would appear as that on your pay stub but when you are self employed, you have to pay it straight up in chunks so it can really add up.
Ohhhh, IRS… you win everytime!
This is one reason I have always had an issue with people classifying briefs as contests, clients as contest holders (CH), and the payment as a winning. This isn’t a game of chance, well it’s not supposed to be. This isn’t like a scratch-off lottery ticket. You actually have to do more than get lucky, at least I have to.
It’s treated as earned income. And you do pay more in taxes than you think you will have to pay because you aren’t having FICA (Social Security Tax) withdrawn from your payments. And depending on where you live, you’ll probably have to pay State Income Tax too.
Yes, it is true. I’ve been a contractor for a long time and early in doing that I learned this lesson the hard way! (Social security tax, which to contractors is called self employment tax).