I Won a Prize but I Am Unemployed, Do I Have to Report It to EDD
My question involves unemployment benefits for the state of: California
I am a freelance writer for a site that pays some people for writing. But, I haven't been eligible for payment, so I, technically, haven't earned any money from them, yet. However, I continue to write for them for exposure in hopes to get a paying job.
Last week, there was a contest going on in which certain "eligible" articles were entered into a sweepstakes (I didn't have to do anything except write an eligible article, which I do on a regular basis, anyway). My name was drawn and I won a prize that is worth, what I believe, is just under $600 in merchandise.
I do have a W-9 on file with them (in case they pay me) and they may issue a 1099, but I'm not sure. I am working with them to find out if this will be included as income, but haven't gotten an answer back, yet.
Would this be included as income? How should I report this to EDD? Will this disqualify me or delay my benefits? If I don't have to report it as income, how will receiving a 1099 affect my unemployment?
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
It was not pay for working, you don't need to report it.
If you do get a 1099-MISC, all you have to do is explain the sourxe.
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
That's good to know. Does it matter, though, that I am technically "an independent contractor" and do some work for them (so far, uncompensated)? I may get paid from them in the future. Do they lump all incentives (prizes) and earnings on one 1099, or do they separate them? What will happen when EDD gets the notice of the 1099? How do I prove that it was from winning the prize and not from the writing?
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
I thought about it some more, and I may backtrack on my previous answer. You wouldn't have been entered into the contest if you hadn't already done work for them, right? It's likely the value of the merchandise will be lumped in with your other earnings. I'd give the EDD a call.
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
That's a good idea. I will also see what the place that is giving me the prize says, too, about whether or not they will be issuing a 1099 for the prize and any future earnings separately, too.
I had no idea that I had been entered into the drawing when I won the prize.
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
I gave EDD a call and sent them some e-mails. The e-mails just told me to report earnings when they are earned and not paid, which was strange because my original e-mail had nothing to do with when to report the earnings. The second e-mail said that you don't report prizes, but, at the same time, if I am doing work and not getting paid, then I am considered not able and available to work due to being engaged in this activity. Again, strange, as I am not spending a lot of time with writing for this site and can still carry on full-time work.
However, when I was on the phone, the guy told me to report it and do a phone interview. He said it's better to be up front with it and I will be in less trouble by reporting this than not reporting it. Though he said he didn't work for that department, it sounds like they are going to consider this income for work. And, he said it's not a big deal and won't lose my unemployment. The interview will be mostly to determine if they have to pay me for that week and if I am available for work.
The website giving me the prize did say that they will be giving me a 1099 that will include the value of this prize plus anything I may earn in the future.
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
If you wrote 10 articles in January of 2011, can they credit/pay you, let's say in December of 2011?
Re: I Won a Prize, but I Am Unemployed, Do I Have to Report It to EDD
It's possible, but from what I understand, if the company is considering this compensation and the prize is over $600, they will report me as an independent contractor. It's better that I report it now rather than later. I will post the results of what happens here and what they say. I don't think I'm going to be interviewed/audited by them for at least another week if at all.
I already have the prize now.