Sweepstakes can be a great way to supplement your income. But, to increase your chances of winning, it’s important that you know all the facts (and myths) about sweepstakes. That’s why we’ve decided to debunk a few common sweepstakes myths that keep doing the rounds.
MYTH: You only need to pay taxes if your prize is worth over $600
A very common myth is that you only need to pay taxes on prizes that are worth more than $600. Don’t believe this! All U.S. resides are required by law to pay taxes on all prizes, regardless of the value of the prize. This myth likely came from the fact that sponsors need to report prizes that are valued at over $600 with a 1099-MISC form. But, this doesn’t mean that winners don’t have to pay taxes for smaller wins.
MYTH: Sponsors don’t want to distribute prizes
Many people believe that sponsors don’t want to award prizes to winners and that they’ll do everything they can from having to actually give away prizes. This is, in fact, wrong. Keep in mind that most companies that run sweepstakes budget for the cost of the prize (this expense is usually part of the firm’s marketing budget). By running sweepstakes, the company is hoping to garner some positive publicity, so it actually works in their favor to award prizes to winners.
MYTH: Using Roboform will disqualify entrants
A lot of sweepstakes entrants believe that entering sweepstakes using Roboform will get them disqualified. This is actually wrong because rules regarding automatic entry apply to firms that mass-enter a lot of people, without them even visiting the sweepstakes website. Does this mean that no company will object to you using Roboform? Of course, not. Some companies have rules against this, but you can’t assume that all companies will disqualify you if you use Roboform. Just make sure to go through the sweepstakes rules and check whether there are any restrictions that specifically prohibit you from using Roboform.
MYTH: All prize notifications from big-name companies are legitimate
A number of people are skeptical of large wins from companies they’ve never heard of. But, if they receive an email or letter from a big-name company, they’re all ready to pull out their checkbooks to claim the prize, which of course, does not appear. Keep in mind that anyone can print the name of a company on paper and send you a prize notification. It’s important that you research how legitimate the company is before responding.
