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prize money

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  • prize money

    Can someone please explain how prize money is reported?

    I know show entries ask for your SSN. I assume that this is for the purpose of reporting prize money. So do they send a report to the IRS listing all the prize money paid out? If it is taken off your show bill (as opposed to them writing you a check) is this handled differently? Do you have to claim all prize money or only claim once it has reached a certain amount? What if the rider is a foreign citizen in the States going to college? How is this reported and what does this person have to do in order to stay in good with the IRS?

    Help please!

  • #2
    The show will issue you a 1099. Treat it like any other 1099. You report it as income.
    http://patchworkfarmga.com

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    • #3
      Wow......so what happens as a Canadian showing in the States? We don't have to report our winnings up here (I don't think, I don't win enough anyway ) and we don't ever get asked for our SSN on our entries. I will be showing in the US next year, will I have to show a Canadian SSN on entry forms??
      Go Ahead: This is a dare, not permission. Don't Do It!

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      • #4
        Originally posted by eclipse View Post
        Wow......so what happens as a Canadian showing in the States? We don't have to report our winnings up here (I don't think, I don't win enough anyway ) and we don't ever get asked for our SSN on our entries. I will be showing in the US next year, will I have to show a Canadian SSN on entry forms??
        If you don't have a US social or federal ID #, the show is required to withhold 30% of your prize money to pay in taxes.
        ILOVERMONT

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        • Original Poster

          #5
          Huh. That's interesting. We have a foreign college student at our barn this year and he just won some decent prize money over the weekend (which is what made me start thinking about this whole thing). I clearly checked the "non US Citizen" box on his entry and the show did not withhold anything. Why do I think this is going to turn into a major pain in the butt?!

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          • #6
            Originally posted by skyy View Post
            Huh. That's interesting. We have a foreign college student at our barn this year and he just won some decent prize money over the weekend (which is what made me start thinking about this whole thing). I clearly checked the "non US Citizen" box on his entry and the show did not withhold anything. Why do I think this is going to turn into a major pain in the butt?!
            Was it less than $600? In that case they wouldn't need to withhold anything...
            ILOVERMONT

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            • #7
              wow. I'm clueless and my head is in the clouds.

              I had no idea that prize money needed to be reported with taxes!!!

              If the gov is going to do that then owners should be able to report all of the annual spendings paid out to GET that prize money for a tax refund. sheesh!
              http://kaboomeventing.com/
              http://kaboomeventing.blogspot.com/
              Horses are amazing athletes and make no mistake -- they are the stars of the show!

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              • #8
                You have to win a certain monetary amount before they will send a 1099. I believe it is $600.00 and then that show will send the information to the IRS and a 1099 to whomever was put down as the person to recieve checks on the entry form.
                The ultimate horse mom

                http://www.youtube.com/user/LeeB110

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                • #9
                  Originally posted by purplnurpl View Post
                  wow. I'm clueless and my head is in the clouds.

                  I had no idea that prize money needed to be reported with taxes!!!

                  If the gov is going to do that then owners should be able to report all of the annual spendings paid out to GET that prize money for a tax refund. sheesh!
                  If you are winning enough money then you incorporate and claim all costs of the horse and showing against your winnings. That is why lots of LLC's own horses.
                  The ultimate horse mom

                  http://www.youtube.com/user/LeeB110

                  Comment


                  • #10
                    Note that, even if you do not get a 1099 because you won less than $600, you are still supposed to report your winnings on your tax return.

                    Comment


                    • #11
                      As someone who runs the office for many shows, here is how it is handled at the majority of shows.

                      A company is required to report to the IRS any prize winnings paid out to anyone person over the course of the year if the amount exceeds $600. Keep in mind that can be over multiple shows if they run more than one.

                      If the person is a foreign exhibitor, the rules are the same, however there are a few differences to be noted. If you do not supply a US SSN or Tax ID # a show must withhold 30% and turn that withholding over to the IRS as it is assumed that the person will not be filing a tax return.

                      In many cases, if you are a foreign rider, your trainer may elect to have the prize money reported to them and give you a credit on your bill. I see that happen often.

                      There are a few exception so the 30% rule. If it is a Canadian business, we are not required to withhold. There are also a few countries that have tax exemption status for their citizens.

                      And there are shows that do not report to the IRS and therefore don't ask for your information. However, as was already stated, even if you do not receive a 1099 you should be reporting any winnings.

                      Think of your prize winnings as winning a scratch off lottery ticket. The IRS, unless you have formed a business, consider this a hobby and any winnings from said hobby are treated as misc income. Unless you are a business you cannot claim expenses for a hobby.

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                      • #12
                        I hope to have that problem some day. Thanks for the info!
                        Live in the sunshine.
                        Swim in the sea.
                        Drink the wild air.

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                        • #13
                          Originally posted by purplnurpl View Post
                          wow. I'm clueless and my head is in the clouds.

                          I had no idea that prize money needed to be reported with taxes!!!

                          If the gov is going to do that then owners should be able to report all of the annual spendings paid out to GET that prize money for a tax refund. sheesh!
                          Yes.
                          Even if you report it as a "hobby", not a "business", you can deduct expenses UP TO the ammount of earnings.
                          Janet

                          chief feeder and mucker for Music, Spy, Belle and Tiara. Someone else is now feeding and mucking for Chief and Brain (both foxhunting now).

                          Comment


                          • #14
                            Originally posted by skyy View Post
                            Huh. That's interesting. We have a foreign college student at our barn this year and he just won some decent prize money over the weekend (which is what made me start thinking about this whole thing). I clearly checked the "non US Citizen" box on his entry and the show did not withhold anything. Why do I think this is going to turn into a major pain in the butt?!
                            It has NOTHING to do with whether or not you are a US citizen -

                            It is about whether you have SS# or other tax ID.

                            The vast majority of non-citizen permanent residents have SS#s
                            Janet

                            chief feeder and mucker for Music, Spy, Belle and Tiara. Someone else is now feeding and mucking for Chief and Brain (both foxhunting now).

                            Comment

                            • Original Poster

                              #15
                              Molly99 and Janet

                              Thanks everyone for your input,especially Molly99 and Janet but now I have more questions Molly99! If the trainer pays all of the client's show fees and the prize money is taken off the bill, does the show issue a 1099 (if it's above $600) to the trainer because the trainer took the credit (and wrote the check) or to the client because technically they are the one who earned the prize money? I really want to do things correctly and not run afoul of the IRS.

                              I am so woefully ignorant! But I tend to not educate myself until I need to know something and then I go into research mode! I had no idea a non citizen could get a SSN. I thought you had to be an American citizen to get one.

                              Comment


                              • #16
                                Originally posted by skyy View Post
                                I had no idea a non citizen could get a SSN. I thought you had to be an American citizen to get one.
                                You have to have a SS# before you can open a bank account, (legally) get a job, or be claimed as a dependant on your parent's tax return.

                                You know that thing they taught you in history class-
                                "No taxation without representation"?

                                They lied.

                                We (non-citizen legal residents) pay taxes, but have no vote.
                                Janet

                                chief feeder and mucker for Music, Spy, Belle and Tiara. Someone else is now feeding and mucking for Chief and Brain (both foxhunting now).

                                Comment


                                • #17
                                  Originally posted by Janet View Post
                                  You have to have a SS# before you can open a bank account, (legally) get a job, or be claimed as a dependant on your parent's tax return.

                                  You know that thing they taught you in history class-
                                  "No taxation without representation"?

                                  They lied.

                                  We (non-citizen legal residents) pay taxes, but have no vote.
                                  Foreign individuals who aren't eligible to get a SSN actually get an Individual Taxpayer Identification Number (ITIN). ITINs look like SSNs, but they always start with the number 9, and the middle two digits are between 70 and 88. For example, 9xx-73-xxxx. ITINs are used solely for Federal income tax purposes.

                                  Comment


                                  • #18
                                    Originally posted by Janet View Post
                                    Yes.
                                    Even if you report it as a "hobby", not a "business", you can deduct expenses UP TO the ammount of earnings.
                                    How can you report any prize money as hobby? And no offense to the valuable advice given on this BB but really people, if you have legal questions like this the person you really should be asking is a CPA as there are other issues - like local and state taxes... now I will say, there might be some CPA's or accountants out there that haven't a clue about wining prize money at horse shows and equine related expenses.

                                    And - not that this will ever be my problem, I don't think I would permit any trainer to request prize winnings be credited to them and applied to my bill...what bill - show bill or trainer's bill- show bill okay, trainer bill - not okay...

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