Why do we get taxed on tournament winnings? Also do we only get taxed on the parts only with $ in it or on other stuff we win too like ipods and so forth?

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2324505:

Why do we get taxed on tournament winnings? Also do we only get taxed on the parts only with $ in it or on other stuff we win too like ipods and so forth?

I really don't like posting one or two liners, but the answer is simple: it's the law. They tax all winnings, from lotto to game tournaments. UDE or Blizzard has zero control over this.

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I am not a lawyer. But, as I understand it, you're obligated to pay taxes on non-cash winnings as well. The major difference is that Upper Deck isn't going to withhold 20% of the packs and send them to the IRS. It's your responsibility to calculate the value of the non-cash winnings and pay the taxes associated with them. This is just like if you won a car on a TV game show, you would need to pay taxes on the value of the car.

As a note, UDE makes you fill out tax forms if you win an iPod and no cash.

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The hands of a healer

So people aren't allowed to give away money/things anymore?

Is it illegal for me to give my friend a dollar because they can't tax it? Or is my friend suppposed to claim it on his taxes?

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A gift can be tax exempt if it truly was a gift. You can't give someone a "gift" in exchange for repairing your roof. But, tournament winnings are considered income and are taxed.

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The hands of a healer

If you gave your friend a dollar from your own free will then no, it doesn't get taxed. The IRS is unconstitutional as it is anyways [I don't like discussing it on a tcg forum so private message me] and major winnings, such as if you won a car off "Wheel of Fortune", or a million dollars off of "Who Wants to be a Millionaire?" are always taxed.

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2324505:

So people aren't allowed to give away money/things anymore? Is it illegal for me to give my friend a dollar because they can't tax it? Or is my friend suppposed to claim it on his taxes?

whats with the tone?  Its pretty obvious you know nothing about the subject, which is fine, but taking a tone of righteous indignation followed by nonsensical claims that do not follow logically is not a great way to learn about something new. 

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Check out my Article Series "Tools of the Trade" here at wowtcg.com!

1292276:

A gift can be tax exempt if it truly was a gift. You can't give someone a "gift" in exchange for repairing your roof. But, tournament winnings are considered income and are taxed.

Quoted for emphasis. You CAN give a "gift" to someone for fixing my roof, however it is considered legal trading because you are exchanging a good for a "service". DING! tax.

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1292276:

A gift can be tax exempt if it truly was a gift. You can't give someone a "gift" in exchange for repairing your roof. But, tournament winnings are considered income and are taxed.

No need to get aggressive towards the people who simply answered your question.


http://en.wikipedia.org/wiki/Tax#Income_tax

Second paragraph under income tax should help you understand.

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How does that work for minors exactly. I'm 16 going to nats and I know I had to fill out a W-2 form last year at Gen Con. But I didn't win anything good so no worries then. But now, if I win something big, do I have to file taxes just for these prizes? (I don't have a job yet, so I don't file taxes)

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Part of the CCGs Crew: We're awesome so you don't have to be!

Once again, I'm not a lawyer or a tax professional in any way, but I don't see how being a minor would exempt you from having to pay taxes on income.

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The hands of a healer

This is a thing that the players who always lose don't have to worry about.
There's no tax on Honor.
Join our ranks at the bottom of the lists! 8-)

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The only thing I win is honor...

The U.S. code taxes your "income" "from whatever source derived". That could mean money, or ipods, or anything really. It's very broad.

If someone gives you a gift of money, that can be exempt within certain limits.

No, it's not illegal to give your friend $1. Stop being a retard.

Their is no excemption in the tax code for minors, though minors rarely have to pay even $1 in taxes because the first $10,000 or so (I don't remember the exact number) that everyone makes  is deductible. So, the first $X you make won't be taxed at all... So if you're a minor and you win an iPOd and a playstation, you won't end up pay taxes on it assuming you have no other income because you didn't make more than the annual threshold from which you can just deduct everything.

tldr; poor people don't pay income tax.

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Heh! This is one of those rare times where I'm actually happy to be pretty much the only Certified Public Accountant that plays this game.

The basic rule is that you're supposed to pay income tax on any earnings that you have. This doesn't just refer to money, but anything with a definitive monetary value (such as an iPod or a Playstation). If you want to get completely technical about it, you should pay taxes on every item that you win: packs, EAs, playmats, etc. However, it's often difficult to assign value to products like this. Hence, the reason that UDE doesn't force you to fill out a W-2 for everything that you get... as well as the reason that the IRS doesn't come after you for not claiming that Red Bearon Loot! :)

The only thing that many WoW players need to know is that you generally only have to pay taxes if your income exceeds a certain level. I'm not 100% sure of the amounts, but I believe it's around $15,000 if your parents still claim you as a dependent; and $28,000 if your parents don't claim you. Like I said, many WoW players won't have to worry about the extra income from an iPod. However, for those that do, there is a silver lining - you can claim your expenses against your earnings. So, if you participate in an iPod draft, you can net the cost of the iPod against the $20 that you paid for the draft. Best part - you can net all of your expenses against your earnings. Say, for example, that you won $10,000 playing WoW this year. You can claim all related expenses - airfare, hotel costs, entry fees, etc - against those earnings. If you paid $2,000 for these WoW events, you had $8,000 in earnings. Of course, if your expenses were greater than your earnings, then you had a loss for the year; which can be netted against your other income. Who'd have thought that WoW could help you pay less in taxes?

Finally, regarding your gift remark, keep in mind that Uncle Sam can only force you to pay taxes on something once. So, if you paid taxes on that dollar that you gave to a friend, then he's not obligated to pay taxes on it as well. Of course, you COULD deduct that dollar from your earnings, and your friend could pay the taxes on it. To be honest, that's actually a good tax planning strategy if you're in a higher tax bracket tha your friend. However, it would probably take more than one dollar for that to be relevant.

Sorry... I know that was all kinda boring and technical. But it should answer your question.

That's interesting though about deducting our expenses to go to WoW events. 

I have a few more questions along those lines, I assume I would need receipts for all my expenditures regarding WoW events and would have to include them in my form? 

When I get prizes at local events I don't usually get any receipt saying how many packs I won or anything else, would those be needed? 

Can a person who wins nothing claim expenditures based on the fact that they were there trying to win something?  i.e. I spend $300 going to a DMF but end up winning nothing except $20 in packs. 

Or do I only get to claim against the value of the prize on hand?  Like let's say I go to a DMF to win a 5k entertainment center and end up spending somehow 6k for the travel/expenses, can I only count 5k of my expenditures because that was the max prize on hand? 

Are these able to be done with the 1040 form we normally get in the mail or do we need some kind of line item form for this kind of thing?

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Only two things are infinite......