Do I Have To Pay Taxes on My Trivia Prizes?
Short answer: yes, trivia winnings are taxable. You should report and pay taxes on trivia prizes.
The IRS requires a form be issued for income over $600 (and, under their definition, trivia winnings would count as income). At Sporcle, if players earn $599.99 or less in a year, we do not send them any kind of tax forms. If they cross the $600 threshold, we require them to complete and return a W-9 before they can receive the winnings that put them over.
Even if we don’t send you a tax form, you are technically supposed to report — and pay taxes on — all your cash and non-cash prizes, even if it was just a few bucks. However, common practice is not to claim winnings under $50 on your taxes. When you consider that most bar trivia nights award $10-$20 gift cards that split up between a team of 2-6 people, the average player won’t have tax obligations. Bigger cash prizes are awarded at at the rare weekly trivia night like The River in Chicago, so if you play – and win – at one of those venues, you might want to keep close track of your total winnings. Leagues and Championships also award bigger cash prizes that are more likely to put a player over the $600 amount.
Who Decided to Tax Winnings? When and How Can It be Avoided?
Prizes and awards were made fully taxable in 1986. That means winning the lottery, a Nobel prize, or even Olympic medals will have you owing the IRS money. If ever Oprah gifts you (and you, and you, and you) a car, be wary: you’ll have to pay taxes on its fair market value.
The IRS website itself says, “If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, raffle, horse race or casino, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income.” They make a point to include both cash and non-cash prizes. When it comes time to file taxes, you’d list these prizes and awards as other income on Form 1040, Line 21.
(Because it’s taxed as income, if you live in one of the states that doesn’t have an income tax – Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming – you can at least avoid paying state taxes on the winnings.)
You can avoid these taxes altogether by declining an award, like six Nobel Laureates have done, or re-gifting it to charity, like President Barack Obama did. If the award is tangible property, like a car, or an experience, like a vacation, you should ask what the fair market value is so you’re prepared to pay taxes on it. If you end up owing more in taxes than you can afford, you can attempt to sell the item(s) and keep the rest as profit, or – better yet – you can ask to be given the cash value of the prize instead. Either way, it will be taxed, and at least with the cash you’ll have some money in the bank left to pay the taxes.
We are a trivia company, not a tax company. We aren’t tax professionals and this article is not intended to be legal advice, but a general overview of how taxes on trivia prizes work in the United States. Tax laws change frequently, and the most recent information can be found on the IRS website. If you ended up here because you’re desperately Googling your complex gambling winning tax question, we highly recommend seeking out a certified professional who can give you personalized advice. Your tax situation may be different from what is outlined here, and you should always consult with a knowledgeable tax professional if you are unsure about anything to do with taxes.