A Redditor and Xbox fan known as Elvite has spilled the beans on one of the toughest decisions an American gamer can face – Decline a lifetime subscription to Xbox Game Pass Because of the taxes they would have to pay if they won an award as a US citizen.
It should be noted that US laws consider any free winnings – whether prizes, sweepstakes, sweepstakes or lottery tickets – regular (and taxable) income, no matter how big or small the amount (unless you live in a state that doesn’t tax this type of income, like California or Nevada). The tax part is also mentioned in Microsoft Contest Rules pageSo it’s really not a surprise, unless you forget to read it yourself.
Sweepstakes are contests where you can win a prize just by making your choice. Of course, you still need to enter your information to be able to claim the prize, or in this case, you can gain entry through Microsoft Reward points.
Users who search on Bing.com and buy things from the Microsoft Store earn points that can be redeemed for products or sweepstakes entries. (For example, you can get 25 sweepstakes entries for just 1,000 reward points).
Based on the Redditor’s post and his calculations, if they were to take the award, they’d add another $7,300 in taxable income to their 2023 tax return. The math can be tricky to understand, but the total is based on the fact that a lifetime subscription actually means 40, so it would be The award has tangible value for reporting to the Internal Revenue Service (IRS).
User SophiaofPrussia shed some light on this issueExplaining that taxes are imposed because the prize is not a gift, but an advertisement. Logically, this may sound strange FreshBoyleOil Oil indicatedR ; It is as if the people who are being advertised have to pay for the privilege of being advertised.
However, SophiaofPrussia explained that cAn important difference between a gift and an advertisement is that the giver expects something in return, and in the case of Microsoft’s awards, they treat it like advertising and expect a return in revenue. In other words, the IRS makes a distinction between gifts and prizes based on the intent to transfer money or property, which is why the user ultimately had no choice but to decline the prize.
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