Kayak Fishing Utah is not a certified tax attorney, advisor, or accountant. Please consult a licensed professional before reporting your prize money.
Competing in Kayak Fishing Utah Events can earn you cash and prizes valued at $600 or more. Please be aware that we are responsible to obtain a signed, legible copy of an IRS form W-9 from every Winner that we issue a prize to in excess of $600. This means that any competitor who has been verified as a prize winner that we issue a prize of $600 or more to, will need to fill out a W-9 form for us to keep on record, regardless of the number of times in the course of a tax year the same person wins a prize. In addition, if one person wins multiple lower valued prizes within the same year, which when added together total $600 or more, they too will be required to complete a form W-9. It is not necessary to send the actual or copy of the W-9 to the IRS; however, the information contained therein will be used by KFU to complete an informational report for the IRS, such as a 1099-MISC form for each appropriate Winner. And, KFU must send a copy of the 1099-MISC form to the appropriate Winner by mail, postmarked by January 31st of the year following the year in which said prize was won, and to the IRS by February 28th. Please note that there are associated penalties that may be imposed by the IRS if this requirement is not adhered to. As tax laws change frequently, please refer to the IRS website directly for the most recent updates, forms, and information.
The information herein serves as notice to potential Winners the requirements of accepting a prize, the forms that we are requesting Winners to fill out, and how their tax information will be used. KFU is making Winners aware that they will be responsible for any taxes imposed on cash & prizes (including, but not limited to all local, state and federal taxes) and therefore are required to complete and deliver to KFU, a completed W-9 form. We advise the Winner to consult with their tax advisor. The form will ask for the recipient’s name, address, their taxpayer identification number (social security number), date and signature. Needless to say, the W-9 form contains sensitive information which will be kept private and secure in physical form in a locked cabinet at KFU HQ. Digital copies will NOT be kept to reduce the threat of hacking. Winners will be required to fill out a W-9 at the event when you cross the $600 threshold.
The Internal Revenue Code mandates that the value of the prize(considered as “other income”) be included in the Winner’s gross income. If the value of the prize is $600 or more, KFU (or their designated Agency/Prize Provider) must file with the Internal Revenue Service a Form 1099 (with a copy to the Winner) reporting the value of the said prize, as explained above. The information provided on the 1099 Form will include the Sponsor’s, name, address, their tax ID number, the value of the prize, winner’s name, their address, and their social security number. The amount of tax a Winner must pay on the prize received is determined on the Winner’s income and the tax bracket they fall into. When the prize is cash, the value to be reported on their 1099 form will be the dollar amount of the prize (face value). If the prize is not cash or its equivalent, then the approximate retail value (ARV) or the fair market value (FMV) of the prize must be reported. Although the Official Rules may post a specific ARV of a prize (other than cash); the amount reported on the 1099 form should reflect the actual cost expended by KFU which may be less than the posted ARV or, if the prize is a kayak, the manufacturer’s suggested retail price (MSRP). There may be instances when the amount noted on the 1099 form is disputed by the recipient Winner. KFU may (in their sole discretion) revise the 1099 form amount if there is valid proof that the FMV of the prize won is lower than the ARV value reported.
Another point to keep in mind is that if a Winner wins a prize valued under $600 they will not receive a 1099 form; however, this does not preclude them from reporting their winnings as “other income” and from paying income taxes.