7 Facts About Sweepstakes Administration & Affidavits

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So you won, and there’s an affidavit for you to sign. This means you most likely won a big prize like a car or a trip. Yay!

One of the most common questions from those who win sweepstakes and contests, and from those who administer interactive promotions, is what to do about affidavits. Here are a few things to keep in mind about affidavits. This info applies you’re entering sweepstakes or a sweepstakes administrator who is wondering what to do about them:

For the sake of clarity, I want to first explain what affidavits are. Affidavits are legal documents which are sent to prize winners by judging agencies (sweepstakes administrators). Their purpose is to qualify the winner’s age, state of residence and prove the winner’s identity.

  1. Generally, affidavits are sent when somebody wins a prize worth $600 and over. If you are administrating a sweepstakes it’s your responsibility to send the paperwork to qualify the winner(s). Sending affidavits is not an imperative, but recommended if you want to be 100% sure the person you are sending the prize to is qualified under your rules to receive it, and is the right person.
  2. Sometimes affidavits are sent to qualify winners of smaller prizes, but this seems like a waste of time to me. It’s up to the judging agency to decide if they want to do all this paperwork. (Most don’t.) If you’re a prize winner with an affidavit for a cheap prize, you need to weigh the value of the win against the trouble of getting the affidavit signed. Many people opt to pass under these circumstances.
  3. Affidavits are signed by the winner in front of a notary public. The notary’s signature and official stamp legally validates the winner’s identity.
  4. Affidavit parcels contain the affidavit itself, the sweepstakes rules and maybe a cover letter with instructions. These parcel are usually sent to winners via FedEx or UPS in letter envelopes, but not always. Once in a while affidavits are sent as documents attached to emails.
  5. If you are the recipient of an affidavit attached to an email, it’s your job to print out the document, have it notarized and return it at your own expense to the sweepstakes administrator. If it’s a big prize you don’t want to miss out on, using delivery confirmation is recommended when sending the affidavit back using the US post office.
  6. Affidavits begin the process of reporting a sweepstakes prize as income to the IRS. They contain a space for the winner’s social security number, and the winner should expect expect to receive a tax form, the 1099-MISC,  from the sweepstakes sponsors. The purpose of the 1099 form is to report miscellaneous income.
  7. The sponsor’s, name, address, and tax ID number need to be on the affidavit. If you’re a small sponsor missing this info, and sending out a small prize, skip it. Reporting prizes as income is ultimately the responsibility of the winner.

If you’re a sweepstakes winner holding an affidavit that overstates the value of the prize, this is common so don’t be concerned. You only have to pay misc. income taxes on the fair market value of your prize. The fair market value can be proven very easily. Just do a for ads for the same thing that you won as evidence of the real value of the prize.

 

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