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.
Why do Canadians have to answer a skill testing question? Does not make scence to me…
I will answer your question on the blog. It is a legal issue.
Thank you for answering my question! I really appreciate your answer. 🙂
Hypothetically though, would you rather be a Canadian contester or an American sweeper or an Australian Comper? Canadians have less competition than Americans from other contesters but have to do the math question and the prizes are not as big, Americans have a lot of competition, income taxes to pay but also often they have big prizes, while Australian have the smallest population of the three, I don’t believe they pay income tax on the prizes either, but a lot of their contests are creative writing, like they did in the US in the 50s and 60s (ex. In 25 words or less write something about the product).
I would rather be an American sweeper and pay the taxes. Yes, there is far more competition, but there are more opportunities to win and the prizes are much bigger. Maybe one day I’ll retire to Florida and become a sweeper! (Plus I could wear flip flops all year long.)
Interesting because I would chose Australia. 🙂 I won a trip once in a Canadian contest where you had to write and I think I would enjoy the challenge and the better odds. Hope Florida works out for you one day!
I recently won a trip contest in canada. I only learned after that i have to pay the taxes which is pretty hefty. Over 600 dollars in taxes. I am thinking of declining the prize
You have to always read the full official rules. Many Canadian trip contests expect you to pay the travel taxes as the sponsor is only donating the vacation, not paying any of the government fees. (NOTE: This is different from the American income tax on prizes. These taxes are HST, airport taxes, etc.) If you had to buy the trip you would have had to pay for the trip and all the same taxes. Remember ALL travel wins are cheap vacations, not free vacations, as you would need spending money for sightseeing, souvenirs, many times meals, tips, excursions, etc. I would take it!!
Yes i just got confirmation that my Canadian vacarion trip win with canjet does not include taxes and will be about 600 to 700 dollars. I will still take the trip because it’s still a cheap trip. I was hoping the tax would be much less of course but oh well
Glad to hear it. You will have so much fun you will realize it’s the best money you ever spent.
also they told me they were nice enough to upgrade to me to canjet select
was this trip sponsored by Transat by any chance?
It was canjet vacations
And i forgot to ask if I could take the cash value of the prize but I suspect the answer is no in any case
What about the reverse: if an American wins a Canadian sweepstakes, does the winner pay tax to the IRS on what is “foreign” income? Who is obliged to report the winnings to the IRS?
Duncan above asked a great question