 - Irene Colling  Contact Irene Colling Irene Colling's Gallery |
Do I owe tax on photo contest income I am an amateur photographer who managed to will several local contests in 2007. The prize money ranged from $30 to $100 and totaled $450. Do I have to report all of this as income? In many cases the expense involved to enter the contest (entry fee, printing, transportation etc.) wiped out any profit I made on winning. If someone can guide me I'd greatly appreciate your knowledge.
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- Gregory LaGrange Contact Gregory LaGrange Gregory LaGrange's Gallery |
Yep.
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Bob Cammarata |
Contest winnings are like gambling winnings. You must file your winnings as income but you are allowed to deduct up to that amount in expenses within the same calendar year to offset those winnings...IF the expenses incurred were associated with your intent to enter those contests AND if you have receipts to back them up. It's doubtful that anyone from the IRS would come after you for such a small amount but you would be wise to research your local state tax codes to see if these same guidelines apply.
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Mark Feldstein |
Section 61 of Title 26 of the U.S. Code (Internal Revenue Code) says you must report all income "from whatever source derived". In other words, regardless of what the source is. The contest should be requesting or has already received your social security number (assuming you're a U.S. citizen) and will report the earnings to the IRS as miscellaneous income on IRS form 1099. The advantage to this, as Bob indicated, is that you can deduct any reasonable and necessary expenses associated with making the image and entering the contest. To get this entire act together, talk to a bookeeper or an accountant before filing your taxes for the year in which you "derived" or received this windfall.
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