Anna commented on my blog post Switching Over Email Addresses Without Losing a Single Prize:
Loving the daily posts, Carolyn! I did have to change emails in the past. My issue was that I won a prize, and the sponsor was not receiving my reply. I panicked and changed immediately.
Oh, and I wanted to ask one thing: maybe you can do a post on a Canadian winning an American contest? Have you ever won one? I know that Canadians winning a Canadian contest do not pay income tax on the prize won, but I could not find the answer anywhere as to what happens if a Canadian wins an American contest, like a trip, for example. It makes me scared to enter American-sponsored contests cause I don’t know what will happen!
Let me answer your questions one at a time.
Have you ever won one? No. I have never won an American contest. You can only enter and win contests that you are eligible for. I have won contests open to both Canada and the U.S. Nothing big, like a trip. Only smaller prizes, such as runners or a purse.
Did you have to pay taxes? No. I did not have to pay income tax. I did have to pay duties when the prizes were shipped across the border.
What happens if a Canadian wins an American contest, like a trip, for example?
It depends. If the sponsor and agency have done their due diligence, and the rules are written properly, if a contest is open to both Canada and the U.S. if the winner is Canadian, they have to answer a skill testing question to claim their prize and the American would get a Form 1099-MISC at tax time. The amount of tax they would have to pay would depend on their income and the tax bracket they fall into.
That said, most contests open to both countries are run by American companies that do not understand the Canadian portion of their contest must comply with Canadian promotional law. The tip-off will be in the rules. If there is no statement regarding a skill testing question for Canadian entrants, then they will attempt to treat a Canadian winner like an American. If you win, sometimes you can point out their error and get the taxes dropped. Sometimes you can’t.
The reason I have not won a big prize from an American contest is I teach entering best odds sweepstakes. I only enter a contest open to both countries if it is one entry only. I have limited entry time and I want to spend that time on promotions so I have a better chance of winning.
Don’t be scared to enter. The worst that could happen is you win a prize and turn it down or spend a wee bit on taxes. The prize value and potential adventure would far outweigh any downside.
If you have a sweepstakes, contest, or giveaway question, please email me.