Tax On Paid Bid To Worlds?

[Mom23]

Hi everyone! Does anyone know if athletes (or the gyms) need to pay tax on the money received for a paid bid to Worlds? I haven't been able to find anything about it here by searching. Thanks!!

 

[quitthedrama]

no. The check is not made out to the athletes. It is made out to the gym.

 

[Mom23]

Thanks! In this case, our gym got our money for the paid bid after everyone had already registered themselves for Worlds. So the gym received the money and is now cutting a check for each athlete to reimburse for registration and to use towards travel. There is a question of whether we need to fill out a W9 to get the money. Does anyone have experience with this?

 

[quitthedrama]

Thanks! In this case, our gym got our money for the paid bid after everyone had already registered themselves for Worlds. So the gym received the money and is now cutting a check for each athlete to reimburse for registration and to use towards travel. There is a question of whether we need to fill out a W9 to get the money. Does anyone have experience with this?

congrats on the paid! I have never heard of a gym doing this. The gym can not issue a tax form to the athlete as an indpendent contractor, and the athlete is not an employee to the gym. However I suppose technically a gym could call it "winnings" but it would work in your favor since the expenses attributed to getting the paid bid and utilizing the paid bid (the "winnings") are far higher than the paid bid itself - so similar to lottery ticket winnings, if you claim the winnings you would be able to offset the expenses attributed to the winnings. I kind of wish our gym did this now

 

[Mom23]

Lol, I never thought of this as a good thing! Thank you for the kind words! We are so excited and humbled by the paid bid; it is a first for our small gym! Your answer was really helpful. Thank you!

 

[Cheermom90]

I have never heard of a gym doing this and I wouldn't be in favor of completing a W9 to access the paid bid funds. We received a paid bid last year and the check was sent to the gym in plenty of time for us to register so there wasn't any need to refund athletes. Did you upgrade to paid after registering? In our case, the gym paid for the travel package upon registration.

 

[Ashley]

congrats on the paid! I have never heard of a gym doing this. The gym can not issue a tax form to the athlete as an indpendent contractor, and the athlete is not an employee to the gym. However I suppose technically a gym could call it "winnings" but it would work in your favor since the expenses attributed to getting the paid bid and utilizing the paid bid (the "winnings") are far higher than the paid bid itself - so similar to lottery ticket winnings, if you claim the winnings you would be able to offset the expenses attributed to the winnings. I kind of wish our gym did this now

Has the value of a paid bid gone up at all in recent years? The commuter fee is $370 this year, was $340 last year, and I believe $330 the year before that.

 

[Mom23]

That's a good question! This year a full-paid bid is up to $650 per athlete.

 

[luv2cheer92]

That's a good question! This year a full-paid bid is up to $650 per athlete.

Yea that's what it's been for a while, since it was just a flat 25K.

 

[Mom23]

Well that's a bummer!

 

[catlady]

Between International tax and youth athlete compensation/monetary prize laws, I'm betting this is why International teams don't receive paid bids.

I tried to Google specifics on this and basically what I read states prize winners are supposed to receive a 1099 on prize winnings over $600. Unless your social security number was taken for prize distribution, you won't get a 1099, but technically you are supposed to record it as "income". Then, it's prize money on a non-professional athlete, so you would not be able to deduct expenses, those would be considered personal expenses.
It just seems like the money would take a double tax hit distributing it this way, first the gym, then it's members. Any tax accountants or CPA's out there?

 

[Mom23]

It just seems like the money would take a double tax hit distributing it this way, first the gym, then it's members. Any tax accountants or CPA's out there?

I totally agree...also we paid for Worlds registration initially with post-tax money...

 

[luv2cheer92]

Between International tax and youth athlete compensation/monetary prize laws, I'm betting this is why International teams don't receive paid bids.

I tried to Google specifics on this and basically what I read states prize winners are supposed to receive a 1099 on prize winnings over $600. Unless your social security number was taken for prize distribution, you won't get a 1099, but technically you are supposed to record it as "income". Then, it's prize money on a non-professional athlete, so you would not be able to deduct expenses, those would be considered personal expenses.
It just seems like the money would take a double tax hit distributing it this way, first the gym, then it's members. Any tax accountants or CPA's out there?

There are some international teams that get paid bids, not too many though. There's at least one from Canada and one from Australia this year. Several more partial paids, but those don't get as much money.

 

[quitthedrama]

Has the value of a paid bid gone up at all in recent years? The commuter fee is $370 this year, was $340 last year, and I believe $330 the year before that.

It's been $650 per athlete since as long as I can remember. At this point it's a partial paid lol.

 

[catlady]

There are some international teams that get paid bids, not too many though. There's at least one from Canada and one from Australia this year. Several more partial paids, but those don't get as much money.

I didn't realize that. They had a whole section on prize money being awarded to NRA's (non-resident aliens) and it talked about 30% being withheld, a 1042S, students on a F-1/J-1 Visa, and a lot of blah-blah-blah that went over my head. Then I looked up American prize money going to a foreign student athletes and it went into a bunch of other yada-yada-yada that was similar to our NCAA equivalent in different countries. I stopped reading that after the first few sentences. Catlady logic- In those cases, by the time you pay the taxes and the tax accountant to figure it out for you, you've lost money.