MidwestTech
Member
Hello. This post is a bit long, but please read the whole thing.
I live in Illinois, and I receive Illinois Medicaid. Specifically, I receive the ACA (Affordable Care Act) Adults program for low-income people.
When I originally applied for the program a year ago, I was asked to list all sorts of income (work income, bank interest, unemployment insurance, pension). I was NOT asked to list any contest winnings, and I did not list any.
Right now, the people in charge of Illinois Medicaid are re-evaluating me to make sure that I am still a low-income person. I have to describe the income that I have had in the past 30 days.
Well, I'm in a bit of a dilemma.
Earlier this year, I entered a contest sponsored by a major company. The participants were asked to come up with names for the company's new product. In mid-February, one of my entries was picked as a finalist. That entitled me to a $1200 prize. The company would study the finalist names, but the rights to the names would remain with the contestants who submitted the names. If the company decided to use any finalist name as the name of the product, the company would give an additional $5000 to the contestant who submitted the name, in exchange for the rights to that name.
I was told in mid-February that I would get my $1200 in June 2019. Well, June came and went, and I got nothing. So, I badgered the company about the money. Finally, at the beginning of August, the company paid me the $1200 via PayPal.
PayPal took a $50 fee from my $1200. When I asked why, PayPal said that, when the company paid the money, the company said that it was paying me for "services rendered".
Services rendered? What's going on here? I thought that I was receiving contest winnings, but, apparently, the company was treating me as some kind of independent contractor.
I asked the company about this. The company told me that the contest I had won was not an ordinary contest. In reality, the company was paying me for coming up with a name that the company could study.
So, how would the $1200 be treated at tax time? Well, my research found the following web page:
https://money.howstuffworks.com/personal-finance/personal-income-taxes/what-is-royalty-income-and-how-is-it-taxed.htm
This web page has the following paragraph:
Often, artists receive advance royalties before a work is completed. For example, a record company might pay a songwriter advance royalties of $10,000 for the rights to 10 songs, plus a percentage of proceeds of the songs' sales. But if the songs end up not
making any money, the songwriter still gets to keep the $10,000. So even though that money is called advance "royalties," the taxman actually sees that $10,000 as money for services rendered, reported on IRS Form 1099-Misc, Non-Employee Compensation
So, it appears that my $1200 is similar to the $10000 in the above example. That would mean that I have to report the $1200 on my Schedule C, and that I can deduct the $50 fee on my Schedule C.
But how will Illinois Medicaid treat the $1200? Medicaid does not care about contest winnings, but Medicaid does care about self-employment income.
I did some more research, and I found the following web page:
https://lowincomerelief.com/will-i-lose-food-stamps/
This web page says that, if a person receives a gift card that he could not reasonably anticipate receiving (for example, by winning a gift card in a sweepstakes), then that gift card can not be used as income for food-stamp determination.
Are the income criteria for food stamps and ACA Adults the same? If yes, then we have the following questions: Is the $1200 that I won, money that I could not anticipate receiving? Can the $1200 be omitted from income consideration for ACA Adults?
Thank you for any information.
I live in Illinois, and I receive Illinois Medicaid. Specifically, I receive the ACA (Affordable Care Act) Adults program for low-income people.
When I originally applied for the program a year ago, I was asked to list all sorts of income (work income, bank interest, unemployment insurance, pension). I was NOT asked to list any contest winnings, and I did not list any.
Right now, the people in charge of Illinois Medicaid are re-evaluating me to make sure that I am still a low-income person. I have to describe the income that I have had in the past 30 days.
Well, I'm in a bit of a dilemma.
Earlier this year, I entered a contest sponsored by a major company. The participants were asked to come up with names for the company's new product. In mid-February, one of my entries was picked as a finalist. That entitled me to a $1200 prize. The company would study the finalist names, but the rights to the names would remain with the contestants who submitted the names. If the company decided to use any finalist name as the name of the product, the company would give an additional $5000 to the contestant who submitted the name, in exchange for the rights to that name.
I was told in mid-February that I would get my $1200 in June 2019. Well, June came and went, and I got nothing. So, I badgered the company about the money. Finally, at the beginning of August, the company paid me the $1200 via PayPal.
PayPal took a $50 fee from my $1200. When I asked why, PayPal said that, when the company paid the money, the company said that it was paying me for "services rendered".
Services rendered? What's going on here? I thought that I was receiving contest winnings, but, apparently, the company was treating me as some kind of independent contractor.
I asked the company about this. The company told me that the contest I had won was not an ordinary contest. In reality, the company was paying me for coming up with a name that the company could study.
So, how would the $1200 be treated at tax time? Well, my research found the following web page:
https://money.howstuffworks.com/personal-finance/personal-income-taxes/what-is-royalty-income-and-how-is-it-taxed.htm
This web page has the following paragraph:
Often, artists receive advance royalties before a work is completed. For example, a record company might pay a songwriter advance royalties of $10,000 for the rights to 10 songs, plus a percentage of proceeds of the songs' sales. But if the songs end up not
making any money, the songwriter still gets to keep the $10,000. So even though that money is called advance "royalties," the taxman actually sees that $10,000 as money for services rendered, reported on IRS Form 1099-Misc, Non-Employee Compensation
So, it appears that my $1200 is similar to the $10000 in the above example. That would mean that I have to report the $1200 on my Schedule C, and that I can deduct the $50 fee on my Schedule C.
But how will Illinois Medicaid treat the $1200? Medicaid does not care about contest winnings, but Medicaid does care about self-employment income.
I did some more research, and I found the following web page:
https://lowincomerelief.com/will-i-lose-food-stamps/
This web page says that, if a person receives a gift card that he could not reasonably anticipate receiving (for example, by winning a gift card in a sweepstakes), then that gift card can not be used as income for food-stamp determination.
Are the income criteria for food stamps and ACA Adults the same? If yes, then we have the following questions: Is the $1200 that I won, money that I could not anticipate receiving? Can the $1200 be omitted from income consideration for ACA Adults?
Thank you for any information.