# Taxation of contest winnings in the US **URL:** \ **Category:** Factual Questions\ **Created:** [July 13, 2017, 3:44pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174 "2017-07-13T15:44:48Z")\ **Posts on this page:** 10\ **Page:** 5
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [July 19, 2017, 3:20pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/81 "2017-07-19T15:20:23Z")
> [@Little\_Nemo](#): > > (which includes paying sales tax)… [Pontiac paid the sales tax and registration fees](http://money.cnn.com/2004/09/22/news/newsmakers/oprah_car_tax/). ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [July 19, 2017, 8:30pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/82 "2017-07-19T20:30:07Z")
AFAIK, this sort of thing is not taxable in Canada - unless it’s related to your employment or Revenue Canada sees it as an attempt to avoid income tax on actual earning. So if you win a car at a game show (oh, wait, this is Canada - you win 100 boxes of Kraft Dinner) no tax. If you win a workplace incentive, free car to the most productive salesman, that’s part of your employment income. Similarly, no gift tax; presumably Uncle Fred paid his income tax on the $2,000 before he handed it to his nephew, so why should he pay taxes twice? They will however come after people who try to play games with this to avoid legitimate taxes - i.e. pay my low-tax-rate kids $5,000 a month to clean the office, instead of taking the money myself as owner withdrawal (taxable at a much higher rate) and then giving it to the kids tax-free. You can pay the wife to clean the office (I know someone who does), but… the compensation has to be reasonable compared to the job done, and it has to be a real job. You can be generous, but not unreasonably so. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [July 19, 2017, 11:15pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/83 "2017-07-19T23:15:37Z")
> [@Alley\_Dweller](#): > > No one argues that those are gifts, not subject to income taxes. But they use an ingenious tax loophole to prevent the families from having to pay taxes. There is a provision in the income tax code that if you rent out your home for 14 days or less in a year, you don’t have to pay any tax on the money (or other valuables) you receive for renting out the house Is this in the US? It seems ripe for exploiting. “My company didn’t pay me $50k for my work, they just rented my house for 14 days” ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [July 20, 2017, 12:42am UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/84 "2017-07-20T00:42:08Z")
> [@Little\_Nemo](#): > > So what? Oprah Winfrey has a lot of money. Why does that obligate her to pay other people’s taxes? > > Do you feel every billionaire owes you something? Because she’s supposedly giving cars to people who need cars, who then won’t be able to actually afford the cars because of the tax and have to sell the car. She’s promoting herself as being highly altruistic, but isn’t actually doing anything to help these people in need. Why are you making the argument that she’s not required to pay when the question is someone wondering why she didn’t choose to? That’s like someone saying that you shouldn’t be an asshole and then someone bringing up freedom of speech as an indication that she should. The answer to his question is simply “Oprah is not as generous a person as she tries to lead people to think she is.” Not right wing arguments. It’s why I’ve always preferred Ellen, and hope there’s no similar problem with her gifts. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [July 20, 2017, 3:17am UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/85 "2017-07-20T03:17:58Z")
> [@Slash1972](#): > > Is this in the US? It seems ripe for exploiting. “My company didn’t pay me $50k for my work, they just rented my house for 14 days” Yes, in the US. IRC § 280A(g): > [@](#): > > (g) Special rule for certain rental use > Notwithstanding any other provision of this section or section 183, if a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then— > (1) no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and > (2) the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61. OR, if you don’t like reading tax code, see [Publication 527, Residential Rental Property:](https://www.irs.gov/publications/p527/ch05.html#en_US_2016_publink1000219202) > [@](#): > > Used as a home but rented less than 15 days. If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). You are not required to report the rental income and rental expenses from this activity. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 20, 2017, 12:35pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/86 "2017-07-20T12:35:04Z")
> [@BigT](#): > > […]but isn’t actually doing anything to help these people in need. Only if resale value less fees and taxes is zero. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [July 20, 2017, 1:07pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/87 "2017-07-20T13:07:20Z")
> [@Alley\_Dweller](#): > > Yes, in the US. > > IRC § 280A(g): > OR, if you don’t like reading tax code, see [Publication 527, Residential Rental Property:](https://www.irs.gov/publications/p527/ch05.html#en_US_2016_publink1000219202) Cool, thanks for the links. Still seems weird to me - I can rent my house for 13 days for $20 million, but I don’t have to declare the income? I must be missing something. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [July 20, 2017, 5:42pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/88 "2017-07-20T17:42:21Z")
> [@Alley\_Dweller](#): > > Yes, in the US. > > IRC § 280A(g): > OR, if you don’t like reading tax code, see [Publication 527, Residential Rental Property:](https://www.irs.gov/publications/p527/ch05.html#en_US_2016_publink1000219202) Well, yes, but you cant use that as a way of getting around employment taxes. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [July 20, 2017, 5:54pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/89 "2017-07-20T17:54:23Z")
> [@Slash1972](#): > > Cool, thanks for the links. Still seems weird to me - I can rent my house for 13 days for $20 million, but I don’t have to declare the income? I must be missing something. Like equivalent tax rules in Canada, I assume some payment has to be reasonable, or else it’s deemed simply an attempt to evade taxes. Sort of like… You can hire your family at standard janitorial wages to clean your office. But if you pay your wife and kids 3 times regular janitorial wages, and the job only called for 1 full time janitor - then you are trying to evade taxes on yourself. (Mark Twain: “How many legs does a dog have if you call the tail a leg?” Second Banana: “Five?” Mark Twain: “No, four. Calling a tail a leg doesn’t make it a leg.”) I suspect it works for home reno shows because it is legit in that case. They are renting a house and using it as a prop for a renovation show - meaning it has an extremely high value to the show, so the value added is not out of line. The recipients are not otherwise connected to the business, so it’s not an attempt to disguise wages or bonus as rent. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [July 20, 2017, 6:46pm UTC](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174/90 "2017-07-20T18:46:03Z")
> [@Slash1972](#): > > Cool, thanks for the links. Still seems weird to me - I can rent my house for 13 days for $20 million, but I don’t have to declare the income? I must be missing something. I didn’t see any \*specific \*exceptions in the link but I’d imagine it would get you in trouble. A related, but not identical situation: You can write off expenses for rental property you own but only if you rent it out. You can’t have any expenses for a property that sits empty all year or is inhabited solely by the owner. You can rent it out to a family member, but you have to charge a fair rental price - you can’t claim that you were charging them $100/month and expense that (though note that in _most_ cases, you can’t exceed your rental income in deductions anyway). Similarly, doing your think would probably get you into trouble as you are not charging a fair value. Here’s the IRS part, though note that they don’t say anything about **greater** price: > [@](#): > > Fair rental price. A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. > > Ask yourself the following questions when comparing another property with yours. > > ``` > Is it used for the same purpose? > > Is it approximately the same size? > > Is it in approximately the same condition? > > Does it have similar furnishings? > > Is it in a similar location? > > ``` > > If any of the answers are no, the properties probably are not similar. [Previous page](https://boards.straightdope.com/t/taxation-of-contest-winnings-in-the-us/791174.md?page=4)