Reporting and withholding for large prize

July 29, 2020


Q.¬†We are purchasing a safety incentive award valued at between $20K to $25K for an employee of one of our subcontractors. The prize will be purchased in California. (Our subcontractor is currently working on a job of ours in California.) The participants will be entered into a random drawing based on their safety performance. How should this be reported? 1099-MISC/NEC? W2-G? For the purchase price? Because the prize is valued more than $5,000, is the winner required to submit 25% withholding…

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