Today TaxMama hears from Sherry in Mount Holly, NC who tells us. “I received a trip from a company my employer is a distributor for by reaching our purchasing goals for the year. I know I have to pay taxes on the trip ($2,500.00) but where do I report it on my 1040 form and do I have to pay social security taxes on it?”
You’re right. The trip is a taxable prize. Doesn’t that nearly spoil all the joy?
You’ll need to report it on line 21 of your Form 1040 as other income.
But since your employer didn’t give it to you, you won’t have to pick up self-employment taxes on it.
You don’t have an employee relationship with the distributor. Well, at least that’s a break.
Perhaps that’s one of the reasons your boss was smart enough not to have the distributor give it to your company first. Do enjoy the trip.
And remember, you can find answers to questions about employee gifts and all kinds of other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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