|
Reducing prize taxes
Dear Tax Talk:
I won a ski trip to Utah. The contest
said the trip was valued at up to $26,000. During the trip I saved
most receipts and estimated the value of things I did not have receipts
for. After the trip, I added up the cost of everything and even
added about a thousand dollars. It came up to about $7,000. I just
received two 1099 forms totaling $27,500. I have tried to contact
the company to no avail. What can I do?
Ed
Dear Ed:
Lucky you, a ski trip and a tax dispute.
I can't imagine that a week in Utah would come to
$27,500 and your number sounds closer to reality. Since you've already
contacted the company that issued you the 1099-MISC form, you'll
need to get the Internal Revenue Service involved.
Although I hate telling folks to call the IRS this
time of the year, since it's difficult to get through, they're the
only ones that can help you. Call the IRS at (800) 829-1040 early
in the morning, when you stand a better chance of getting through.
Tell them that you received the 1099 and disagree with the amount.
Tell them that you've tried to resolve the situation but have been
unable. Tell them that you were advised to have IRS complete a Form
4598, Form W-2 or 1099 Not Received or Incorrect. The form
is for IRS use only so you won't find it on its Web site.
You'll need to give the IRS the payer information
from the 1099 and the details of how you arrived at your figures.
The IRS will send the complaint form to the payer, who has 10 days
to respond. A copy will also be sent to you. Assuming everything
works as it should, you'll receive a corrected 1099 from the payer.
If you don't receive a satisfactory response by the
due date of your return, include the amount that you believe to
be correct on your return (line 21) and attach the Form 4598 and
an explanation. The IRS may later send you a notice of the discrepancy,
so keep your records in good shape.
You're certainly not obligated to pay tax on more
than the value of the prize but you'll need to devote some effort
in straightening out this matter. I'd wish you luck but it seems
you already are lucky.
-- Posted: Feb. 27, 2003
|
