Should I decline Grand Prize trip because of taxes on winnings?
Should I decline Grand Prize trip because of taxes on winnings?
At first I thought it was a spam/spoof email “You are the grand prize winner of our sweepstakes!”. Turns out, last week I actually DID WIN the grand prize which includes not only one, but two golf related trips. I spent the first 48hrs making calls and writing emails to confirm this was legitimate. This is a once in a lifetime opportunity to hang out with the golf pros during a famous tournament in January, get fitted for my own set of custom clubs, play on two different famous courses, have an individual lesson with a pro, and other perks.
The issue is, the prize is worth around $9000, which I will have to pay taxes on. Given our high tax bracket it will probably be close to $4000! These trips include things that I literally could not pay to do, such as walking on the course during the tournament with one of the famous golfers. It is an amazing opportunity and I’m sure will be an incredibly fun time and leave me with great memories and stories.
However, my interest in golf is medium. I play occasionally throughout the summer, and I do not watch golf on TV. I cannot take cash instead of the trips, and I can’t transfer the prize to anyone else, it has to be me and one guest. My husband has about the same level of interest in golf as me. (My FIL and MIL however are green with envy-I wish I could give it to them!).
Financially we can easily afford to do this. However we don't typically travel a lot, and have built up a significant net worth by being frugal . Like my husband said, “if you were going to spend $4000 on a trip, would this be it?” And the answer is no, this is not my “dream trip”. However it is an unusual opportunity that will never happen again, and I’m sure I would enjoy it. Is that enough reason to do it??????? I would appreciate everyone’s thoughts! Are there other financial implications I'm not thinking about?
The issue is, the prize is worth around $9000, which I will have to pay taxes on. Given our high tax bracket it will probably be close to $4000! These trips include things that I literally could not pay to do, such as walking on the course during the tournament with one of the famous golfers. It is an amazing opportunity and I’m sure will be an incredibly fun time and leave me with great memories and stories.
However, my interest in golf is medium. I play occasionally throughout the summer, and I do not watch golf on TV. I cannot take cash instead of the trips, and I can’t transfer the prize to anyone else, it has to be me and one guest. My husband has about the same level of interest in golf as me. (My FIL and MIL however are green with envy-I wish I could give it to them!).
Financially we can easily afford to do this. However we don't typically travel a lot, and have built up a significant net worth by being frugal . Like my husband said, “if you were going to spend $4000 on a trip, would this be it?” And the answer is no, this is not my “dream trip”. However it is an unusual opportunity that will never happen again, and I’m sure I would enjoy it. Is that enough reason to do it??????? I would appreciate everyone’s thoughts! Are there other financial implications I'm not thinking about?
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Re: Should I decline Grand Prize trip because of taxes on winnings?
Another way of looking at it is the fact that you're getting a huge discount on the trip and you'll also get an experience most people have never had (being that close to the pros on the course). You'll probably never watch golf the same again afterwards.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Take the trip. In your words, its a "once in a lifetime opportunity". The last I checked, you only get one lifetime. There is such a thing as being too frugal.
"Confusion has its cost" - Crosby, Stills and Nash
Re: Should I decline Grand Prize trip because of taxes on winnings?
I'd tend to decline myself. I like to get to pick where I go on my vacations myself. You are spending $4000 (and getting a $5000 discount) to take a trip you'd not select and that presumably uses up some of your vacation for the year.
But you sound of mixed feelings, so maybe going for it is a good plan and will be an interesting experience.
Sounds like you've thoroughly checked so you are totally sure you aren't being spoofed? I'd personally have deleted the email without a second thought as there is so much fraud out there. Is this a contest you entered (odd given your middling at best golf interest?)?
But you sound of mixed feelings, so maybe going for it is a good plan and will be an interesting experience.
Sounds like you've thoroughly checked so you are totally sure you aren't being spoofed? I'd personally have deleted the email without a second thought as there is so much fraud out there. Is this a contest you entered (odd given your middling at best golf interest?)?
Re: Should I decline Grand Prize trip because of taxes on winnings?
Can you "give" it to someone else, who might
a. enjoy it
b. be in a low/no tax situation
a. enjoy it
b. be in a low/no tax situation
Re: Should I decline Grand Prize trip because of taxes on winnings?
I think you have your answer right there. But I think going to a warm place in January and playing a couple of famous courses would be worth at least 2 or 3k to me. Is lodging and air fare covered?ldebhaar wrote: ↑Fri Nov 03, 2017 7:48 am Financially we can easily afford to do this. However we don't typically travel a lot, and have built up a significant net worth by being frugal . Like my husband said, “if you were going to spend $4000 on a trip, would this be it?” And the answer is no, this is not my “dream trip”.
If your husband is okay with it, consider taking FIL or MIL on the trip instead. You could rack up lifetime brownie points worth way over 4k.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I would say no, this is not reason enough to do it. My comment is based upon your answer to your husbands question - you would not spend $4,000 to take this trip. To me, that would be the litmus test.ldebhaar wrote: ↑Fri Nov 03, 2017 7:48 am... Like my husband said, “if you were going to spend $4000 on a trip, would this be it?” And the answer is no, this is not my “dream trip”. However it is an unusual opportunity that will never happen again, and I’m sure I would enjoy it. Is that enough reason to do it???????
Having said that, I think people do need to live and spending $4,000 on a trip should not be considered an extravagance (or a dream trip) - not for someone at your combined level of earnings (inferred from your tax bracket). FWIW, my DW and I have been on five trips this year and not a single one cost as little as $4,000. However, we are not frugal - we lived below our means while working and are living at the level of our means in retirement.
Real Knowledge Comes Only From Experience
Re: Should I decline Grand Prize trip because of taxes on winnings?
This was my other thought, but since you said you checked it out thoroughly I left it out of my earlier post. This certainly sounds like it could be a time share / vacation club sales kind of thing. If it was that I'd say no way I'd go.
"Confusion has its cost" - Crosby, Stills and Nash
Re: Should I decline Grand Prize trip because of taxes on winnings?
I don't golf, but I would take it. It is a once in a lifetime experience. You can afford it. In your tax bracket, you can easily afford to take another vacation more to your liking also.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
Re: Should I decline Grand Prize trip because of taxes on winnings?
I don't think the money was real the issue here. I'd personally not go if it were free, as I don't care for golfing and moreover don't want my vacation plans dictated. I think spending lots on vacations that one can afford is a fine use of money as well (have done some expensive ones myself).
Re: Should I decline Grand Prize trip because of taxes on winnings?
I like golf less than you and play less than you, but I personally would take it. It is a very unique experience with a few features that you likely could not pay for if you wanted to (or would have to pay an insane amount or know someone).
If this in fact a tournament in Hawaii like I suspect it is, then it also has the idea of a Hawaii vacation, in January, going for it.
A unique opportunity in Hawaii, I am in!
If this in fact a tournament in Hawaii like I suspect it is, then it also has the idea of a Hawaii vacation, in January, going for it.
A unique opportunity in Hawaii, I am in!
Re: Should I decline Grand Prize trip because of taxes on winnings?
Can you simply disclaim the award?
Gill
Gill
Cost basis is redundant. One has a basis in an investment |
One advises and gives advice |
One should follow the principle of investing one's principal
Re: Should I decline Grand Prize trip because of taxes on winnings?
Go on the trip with your mother in law if your husband isn't really interested. It sounds like something she would really enjoy and you'll both have that memory on top of the golf experience for the rest of your lives.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
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Re: Should I decline Grand Prize trip because of taxes on winnings?
For $4000, I could think of a lot of other places I would rather go or do than to take this trip. Some have said to take it because it is a "once in a lifetime" opportunity. But my question is what are you going to do when that opportunity is over? Tell a few interested friends about the experience upon your return and stick a few photos in your album? If it isn't meaningful to you, it doesn't matter that it is a once in a lifetime opportunity.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I assume the event is one of the following:
PGA 2018 Events
Jan. 4-7, 2018 — PGA Tour: Sentry Tournament of Champions, Plantation Course at Kapalua, Kapalua, Maui, Hawaii
Jan. 8-14 — PGA Tour: Sony Open in Hawaii, Waialae Country Club, Honolulu, HI
Jan 15-21 — PGA Tour: CareerBuilder Challenge, PGA WEST/La Quinta Country Club, La Quinta, CA
Jan. 22-26 — PGA Tour: Farmers Insurance Open, Torrey Pines Golf Course, San Diego, CA
Jan. 29-Feb. 4 — PGA Tour: Waste Management Phoenix Open, TPC Scottsdale, Scottsdale, AZ
I would take the prize and use the opportunity to enjoy local attractions either before or after the tournament. If they're paying for the flight perhaps you can change the date of either your arrival or departure.
PGA 2018 Events
Jan. 4-7, 2018 — PGA Tour: Sentry Tournament of Champions, Plantation Course at Kapalua, Kapalua, Maui, Hawaii
Jan. 8-14 — PGA Tour: Sony Open in Hawaii, Waialae Country Club, Honolulu, HI
Jan 15-21 — PGA Tour: CareerBuilder Challenge, PGA WEST/La Quinta Country Club, La Quinta, CA
Jan. 22-26 — PGA Tour: Farmers Insurance Open, Torrey Pines Golf Course, San Diego, CA
Jan. 29-Feb. 4 — PGA Tour: Waste Management Phoenix Open, TPC Scottsdale, Scottsdale, AZ
I would take the prize and use the opportunity to enjoy local attractions either before or after the tournament. If they're paying for the flight perhaps you can change the date of either your arrival or departure.
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Re: Should I decline Grand Prize trip because of taxes on winnings?
I am not a golfer, rarely watch it, but I would take the prize if it put me in a locale which I wanted to visit and catch some golf on the side.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Should I decline Grand Prize trip because of taxes on winnings?
Do not assume you will have to pay taxes on $9000 just because the sweepstakes places that value on the package. It is to their benefit to inflate this value.
You can easily dispute this value with the IRS. The true value is what you would have pay if you were buying the Individual components yourself. For example, you win a new 60" TV. They will use the retail price of the TV. You can use the best price at Amazon, Walmart, etc...
Price out the airfare, accomodations, custom golf clubs, golf pro lessons, golf course fees, etc... There are even likely packages available for some or all of the above. Price them now and check them on every Tuesday between now and when you go. I wouldn't be surprised to find a true cost of this "package" for < $5K.
You can easily dispute this value with the IRS. The true value is what you would have pay if you were buying the Individual components yourself. For example, you win a new 60" TV. They will use the retail price of the TV. You can use the best price at Amazon, Walmart, etc...
Price out the airfare, accomodations, custom golf clubs, golf pro lessons, golf course fees, etc... There are even likely packages available for some or all of the above. Price them now and check them on every Tuesday between now and when you go. I wouldn't be surprised to find a true cost of this "package" for < $5K.
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Re: Should I decline Grand Prize trip because of taxes on winnings?
I recommend that you and your husband take the trip. It sounds like a great trip, even for someone who is only moderately interested in golf. I think you will experience some things in this trip that you could not duplicate yourself and you will be treated like royalty. Sometimes we need to back away from our frugality and enjoy life. Congratulations.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I had a similar situation where I won a brewery tour vacation in St. Louis, MO at Budweiser from a magazine contest. Two first-class tickets, 5 star hotel stay, and personalized tours of the brewery. Retail price: $6000.
While it was initially exciting to win a prize, I declined. However, before I did so, I asked if they would be willing to decrease the prize amount by changing some aspect of the trip. They were willing to do so, but not by enough to make me inclined to go to St. Louis for a weekend for ~1.5K in taxes.
While it was initially exciting to win a prize, I declined. However, before I did so, I asked if they would be willing to decrease the prize amount by changing some aspect of the trip. They were willing to do so, but not by enough to make me inclined to go to St. Louis for a weekend for ~1.5K in taxes.
Re: Should I decline Grand Prize trip because of taxes on winnings?
“if you were going to spend $4000 on a trip, would this be it?”
If no, why not just spend the $4000 on the trip you would take?
If no, why not just spend the $4000 on the trip you would take?
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Re: Should I decline Grand Prize trip because of taxes on winnings?
Would they be willing to give you something else that you might enjoy more instead? Years ago my MIL won a trip for 2 to Las Vegas, but didn't want to go. She tried giving it to DW and me, but we didn't want to go either I asked her to see if they'd be willing to give her 2 plane tickets to California instead. They were, so the three of us went. One ticket for her, one for DW, and I used one of my frequent flyer tickets. We had to pay our own expenses once we were there but enjoyed it more than we would have in sin city. And it probably cost the prize company less for the plane tickets too. Win-win situation.
The surest way to know the future is when it becomes the past.
Re: Should I decline Grand Prize trip because of taxes on winnings?
No chance for them to just give you cash value?
Re: Should I decline Grand Prize trip because of taxes on winnings?
Are meals included, and can you eat $4000 worth?
Re: Should I decline Grand Prize trip because of taxes on winnings?
It’s a personal decision obviously. Is it worth $4,000 to you? If so take it. If not don’t. Asking us if we would take it really doesn’t help you much.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Just go and have fun with it. Its something you would not normally do so it could be a great adventure.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
Re: Should I decline Grand Prize trip because of taxes on winnings?
Hopefully its for the tournament of champions on Maui. Nice course..plus its hawaii...if its there I would take the trip although I couldnt care less about meeting any of the golfers...and this is coming from someone who loves golf...and who has played on the plantation course.
Re: Should I decline Grand Prize trip because of taxes on winnings?
From what you said the answer should be decline the prize and spend $4000 on a once-in-a-lifetime experience you actually want.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Don't forget the golf clubs. Easily could be worth $1500+ depending on the brand/model. Could probably resell them for a good portion of that or keep them, but you could safely subtract at least $1000 from the $4000 for the value of the clubs. All expense trip to Hawaii plus unique experiences for $3000 sounds pretty cheap to me. The greens fees alone for 2 people to play 2 "famous" courses could easily clear $2000.
Re: Should I decline Grand Prize trip because of taxes on winnings?
So what is your "dream trip," and why haven't you done it yet?
I think it's a bit silly to let a relatively minor tax expense dictate an extremely rare and exotic experience. And as stated above, I am sure you can ratchet down the $9,000 sticker price at tax time.
I think it's a bit silly to let a relatively minor tax expense dictate an extremely rare and exotic experience. And as stated above, I am sure you can ratchet down the $9,000 sticker price at tax time.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Your husband's way of looking at this is correct. Is this worth what it will actually cost you or not? It's not a free prize, it's the offer of a reduced-cost trip and experience. Also, it will probably end up costing you more than just the estimated taxes.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Unless you can figure out why you were 'selected' this is highly suspicious. I do not know if you can share the details of why you think the offer is legitimate but my rule would be if something is too good to be true it is not.
Even if you convince yourself the offer is legit, I would do some planning about how you can bail out on the trip if things go wrong.
edit:
Some possible steps:
1. Airplane reservations: get enough airline miles to book a return flight perhaps by signing up for a credit card for a bonus. You will have to pay a close-on booking fee of about $150 per ticket but this is much cheaper than a reservation close to the flight date.
2. Book an alternate hotel. Most hotels will make reservations without charging you or will allow you to cancel by the day prior to your reservation.
3. Book a rental car. Most rental companies do not require you to pay up-front.
Even if you convince yourself the offer is legit, I would do some planning about how you can bail out on the trip if things go wrong.
edit:
Some possible steps:
1. Airplane reservations: get enough airline miles to book a return flight perhaps by signing up for a credit card for a bonus. You will have to pay a close-on booking fee of about $150 per ticket but this is much cheaper than a reservation close to the flight date.
2. Book an alternate hotel. Most hotels will make reservations without charging you or will allow you to cancel by the day prior to your reservation.
3. Book a rental car. Most rental companies do not require you to pay up-front.
Last edited by dual on Fri Nov 03, 2017 1:08 pm, edited 1 time in total.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I'm a little intrigued by how someone entered in a contest they never wanted the prize from.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Agreed! Go for it and take MILChip wrote: ↑Fri Nov 03, 2017 8:10 am [quote=ldebhaar post_id=3601584 time=1509713332 user_id
I think you have your answer right there. But I think going to a warm place in January and playing a couple of famous courses would be worth at least 2 or 3k to me. Is lodging and air fare covered?
If your husband is okay with it, consider taking FIL or MIL on the trip instead. You could rack up lifetime brownie points worth way over 4k.
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Re: Should I decline Grand Prize trip because of taxes on winnings?
You can donate it and deduct the face value for you tax advantages.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Unless you remember signing up for a sweepstakes, I am not certain this isn't fraud. If it's really only $4,000 due to IRS for a "gift", you shouldn't be paying them as penny, they report the prize to the IRS and you add $4,000 to your tax liability. If they are collecting the $4,000, I think you are being scammed.
"Don't trust everything you read on the Internet"- Abraham Lincoln
Re: Should I decline Grand Prize trip because of taxes on winnings?
Depending on your relationship with your in-laws, could you take one of them and ask that they reimburse you for half the taxes you will have to pay?
Consider this: there are people out there that would love to pay the whole price, maybe even twice the whole price, for the experience of a lifetime. Maybe even your in-laws! So it would likely be worth more than $2,000 for one of them. In effect, that would be letting THEM make the go/no-go decision.
Consider this: there are people out there that would love to pay the whole price, maybe even twice the whole price, for the experience of a lifetime. Maybe even your in-laws! So it would likely be worth more than $2,000 for one of them. In effect, that would be letting THEM make the go/no-go decision.
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Re: Should I decline Grand Prize trip because of taxes on winnings?
Personally I could go on a pretty phenomenal vacation for $4K. I am not into golf so if I was spending that much on a vacation I would go on a dive trip. If a nine thousand dollar golf trip sounds awesome to you I think it's easily worth four thousand dollars.
Re: Should I decline Grand Prize trip because of taxes on winnings?
+1,000
The fact that they notified you by email is a big red flag.
I would think that if it was real they would have sent you a certified letter. By not sending a physical letter they are not committing mail fraud and they don't have to be in the US either.
There may even be a real contest that they are using as a cover for a scam so even if the contest actually exists that does not mean that is legitimate.
If you looked it up on the internet it could even be an entirely fake website.
Some of the scammers are pretty slick.
Re: Should I decline Grand Prize trip because of taxes on winnings?
If the prize is non-transferable how could they donate it?WhiteMaxima wrote: ↑Fri Nov 03, 2017 2:21 pm You can donate it and deduct the face value for you tax advantages.
Re: Should I decline Grand Prize trip because of taxes on winnings?
Weird how you wouldn't want to take advantage of the opportunity given how you describe it.
To be fair, a trip valued at $9,000 would normally "cost" $13,000 given your tax estimate. (since you'd have to make $13,000 at your tax rate to have $9,000 left over after tax to spend on a trip)
So, would you like to take this "once in a lifetime" (which it is) trip worth $13,000 for $4,000? Seems like a no-brainer to me, do it.
To be fair, a trip valued at $9,000 would normally "cost" $13,000 given your tax estimate. (since you'd have to make $13,000 at your tax rate to have $9,000 left over after tax to spend on a trip)
So, would you like to take this "once in a lifetime" (which it is) trip worth $13,000 for $4,000? Seems like a no-brainer to me, do it.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
Re: Should I decline Grand Prize trip because of taxes on winnings?
As an aside for those who win things in the future, please know that the organization will send you a tax form at the end of the year for what they consider the full market value of the prize. But if you can obtain documentation at that time from someplace else that the prize is worth less, you should be able to submit that to the IRS and pay taxes on the lower amount instead.
This would work for winning a car, but not a one-of-a-kind prize like this golf trip, unless they also market it at full price to anyone who is willing to pay it.
This would work for winning a car, but not a one-of-a-kind prize like this golf trip, unless they also market it at full price to anyone who is willing to pay it.
Re: Should I decline Grand Prize trip because of taxes on winnings?
If this is legit, I would take the trip. As someone said, you only have one lifetime and it sounds like this isn't something you would be able to set up on your own. And if it's one of the two major January tournaments being played in Hawaii? GO!!! And if you don't want to, my husband and I would love to go in your place. Regrets aren't any fun.
Last edited by Gnirk on Fri Nov 03, 2017 2:39 pm, edited 1 time in total.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I enter drawings sometimes, not for the grand prize, but for one of the lesser prizes. For example, lesser prizes in this contest could be golf clubs or a private lesson or tickets to a golf tournament. And notifying by email is common if there are lots of small prizes. You want to notify everyone using the same method.
Last edited by celia on Fri Nov 03, 2017 2:46 pm, edited 1 time in total.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I wouldn't pay $4000 for the trip you describe (I probably wouldn't even pay $1350 in my own 15% bracket), but I'm not a golfer. It sounds like you are, and that you would enjoy this "once in a lifetime" trip, so I say go for it (as long is it won't seriously derail other goals and responsibilities of course)!
Re: Should I decline Grand Prize trip because of taxes on winnings?
Are you really 100% sure there is not some catch in this? Have you read all the fine print, and really really checked these people out?
I would try again and see if they would let your in-laws ago instead. If not, I would take one of them instead of your hubby. I wonder why they are so set against substitutions.
Personally, you couldn't pay me to go on a golf trip but to each his own.
I would try again and see if they would let your in-laws ago instead. If not, I would take one of them instead of your hubby. I wonder why they are so set against substitutions.
Personally, you couldn't pay me to go on a golf trip but to each his own.
Re: Should I decline Grand Prize trip because of taxes on winnings?
^ In all fairness to OP at least she doesn't watch golf on TV.
Re: Should I decline Grand Prize trip because of taxes on winnings?
I think the odds are that it is legit if the OP remembers entering such a drawing and gave her email. If she didn't, then, how could she be a real winner? If the in-laws had multiple chances to enter, but could only enter once, so used her name, then, of course, she should invite them to share in the prize (and cost). If neither of them entered, then I would ignore the notice, too.
Something that just occurred to me:
How does the organization know what your tax bracket is, and thus how much in taxes to collect from you? Maybe they have to withhold at the highest tax rate to ensure the taxes are paid, but your actual tax bracket may be lower than 4/9ths (44%). This does sound a little strange to me, tax-wise. But, if they aren't asking for any tax-withholding up-front, then I don't see how it is a scam.
I hope the OP contacted the organization using phone numbers she found on her own, rather than the ones found in the email. And when talking to them, ask what the tax id for their organization is. Then do a lookup on Charity Navigator, if it is a non-profit, or call the IRS to confirm their credibility. (But, of course, a scammer could also use their tax id fraudulently, especially if is (indirectly?) available on Charity Navigator, by downloading their tax returns.)
Last edited by celia on Fri Nov 03, 2017 3:18 pm, edited 4 times in total.
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Re: Should I decline Grand Prize trip because of taxes on winnings?
If you are wondering if you should go, and you don't go, then you will always wonder. If you go, they you will know.