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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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Janet purchased a hole in one insurance for $10,000.00 on

Resolved Question:

Janet purchased a "hole in one" insurance for $10,000.00 on a golf tournament. A golfer had a "hole in one", and won the $10,000.00. The winner will have to pay tax on the $10,000.00 income, right? The winner has to file W-2G form, and file with IRS, right? Janet will keep a copy, right? Janet does not have to pay taxes, right? Last question, is the golf club need to be involved in the transactions? Is it necessary for Janet to hand over the $10,000.00 to the golf club and the golf club pays the winner? Can she do it the short-cut way and merely pay the winner, and both will report it to IRS? Does the golf club need to be involved? I already paid the $30.00 yesterday.

Thank you so much,

Segundo A. Unpingco
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.

I was the expert that answered your initial question yesterday. What is Janet's affiliation with the golf club?

1) The payer of the $10,000 issues the W2G to the winner (payee);
2) The payer keeps a copy of the W2-G, and sends a copy to the IRS and prospective state agency, in this case, California Franchise Tax Board. I did not mention the state in my previous answer.
3) The payee (winner) pays tax on the $10,000, NOT the payer.

Is it the club, or Janet who is actually paying the $10,000?
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2534
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Janet pays the winner not the golf club.

 

Thank you so much for your specific question.

 

Sincerely,

 

Segundo A. Unpingco

Expert:  Tax.appeal.168 replied 2 years ago.
Usually it is businesses or organizations that issue W2Gs. Before giving you an answer as to whether Janet should hand the $10,000 to the club to issue the winnings or do it herself, I want to research the matter a bit further. I will get back with you shortly.

Thank you.
Expert:  Tax.appeal.168 replied 2 years ago.
I don't see any rule where it states that an individual can't be the issuer of a W2G, therefore, if Janet is the payer, her information would go in the payer section of the W2G. Her federal identification number would be her social security number. Please refer to the instructions for more detailed information.

http://www.irs.gov/pub/irs-pdf/fw2g.pdf Form
http://www.irs.gov/pub/irs-pdf/iw2g.pdf Instructions
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2534
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you so much for being so conscientious. I truly appreciate it. The golf club is a non-profit organization. It is a small private golf club, and it is not incorporated with the State of California because its financial status is merely a membership dues of $20.oo a month. We only have 30 members.

 

This is the reason we are hesitant to submit the winning with the golf club because we do not have an ID TAX NUMBER. On the other hand, we can still use Janet's ID TAX Number when reporting the winning.

 

Sincerely,

Segundo A. Unpingco

 

 

Expert:  Tax.appeal.168 replied 2 years ago.
You are very welcome. I understand the hesitancy, but like I wrote before, if Janet is the payer, than the club doesn't need to get involved. Regarding the club using Janet's tax I.D. number,...that's NOT advisable, that would be like using another person's social security number, and the club could lose it's non-profit status behind doing that. Ball position, stance, grip, keep your eye on the ball, and swing from the hips...not necessarily in that order. I am not a good golfer, but I have played the game before.
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2534
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and other Tax Specialists are ready to help you

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