How to File Taxes for Video Contest Earnings

Like wages and stock dividends, contest winnings are always taxable. According to the Internal Revenue Service, "The cash value of prizes or awards won in a drawing, quiz show program, beauty contest or other event must be included on the tax return as taxable income." Cash prizes as well as the fair market value of any merchandise you won are taxable, so you must report both.

Things You'll Need

• IRS Form 1040

Instructions

1. Go to line 21 on IRS Form 1040 to report contest cash, merchandise and service or trip winnings. List it as "Contest Income" and enter the dollar amount. For non-cash winnings, you will need to establish fair market value.

2. Determine the fair market value of any merchandise you won. Play it safe and get an appraisal on winnings of significant value, such as a car. Obtain a written appraisal and save the paperwork. The cost of the appraisal is tax-deductible. For other new merchandise -- a computer, for example -- retail sticker value will suffice.

3. Determine fair market value of services and all-expense-paid trips. Ask the provider of the services to provide you with a written statement of value. Ask the contest organizers to provide you with a statement of their cost for an all-expense-paid trip.

4. Declare winnings that you receive in installments. If you receive annual or monthly payments as a result of winning a contest, you must declare them as miscellaneous income on line 21 of your 1040 form.

References

• IRS.gov: Reporting Miscellaneous Income
• IRS.gov: Form 1040, U.S. Individual Income Tax Return
• IRS.gov: Publication 525, Taxable and Nontaxable Income