Author Topic: Amazing Raffle - AA covered trip  (Read 3088 times)

Offline Side incomer

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Amazing Raffle - AA covered trip
« on: July 26, 2011, 02:51:47 PM »
I'm not sure if it was discussed, but it seems that it wasn't:


     •  Enough AAdvantage® miles for two roundtrip First Class flight awards
     •  Five Star Service for two at the airport
     •  A $5,000 gift card to be used toward:
          – 5-night stay at a five-star hotel
          – Dinner for two at a five-star restaurant
          – Private car service to and from the airport


enter here: http://link.aa.com/r/9PM23E/443TN/JCCQJE/VGW7C4/IGQNE/Y6/h

Terms and Conditions:

NO PURCHASE NECESSARY TO ENTER OR WIN.
Void outside of the fifty(50) United States and the District of Columbia and where prohibited. Open to legal residents of the 50 United States and the District of Columbia who are 18 years or older. There is a limit of a total of two (2) entries per AAdvantage® number. Employees and agents of Sponsor, Administrator and affiliates, agencies, distributors, wholesalers and retailers, and members of such employees' and agents' immediate families and individuals living in the same household with such employees or agents, are not eligible to win. Sweepstakes begins at 9:00 am CDT on July 18, 2011 and all entries must be received by 11:59 a.m. CDT on September 30, 2011. Approximate retail value $15,350. Odds of winning depend on number of entries. Void where prohibited. Participation is subject to complete Official Rules, by which all entrants are bound, available at www.aa.com/fivestarpromorules. Entrants release all parties from all claims/liability arising from this Sweepstakes or acceptance/use of any Prize. Sponsor: American Airlines, 4333 Amon Carter Blvd., Fort Worth, Texas 76155.

Side income is the most solid income... בדוק ומנוסה

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #1 on: July 26, 2011, 02:54:10 PM »
Enjoy paying taxes on $15,350 if you win...
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline Side incomer

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Re: Amazing Raffle - AA covered trip
« Reply #2 on: July 26, 2011, 03:01:26 PM »
Enjoy paying taxes on $15,350 if you win...
Actually, where does is state that they will send you a 1099?
Side income is the most solid income... בדוק ומנוסה

Offline myb821

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Re: Amazing Raffle - AA covered trip
« Reply #3 on: July 26, 2011, 03:03:09 PM »
Enjoy paying taxes on $15,350 if you win...
assuming u can use the 5k gift card for anything u can use it to cover the taxes and just keep the miles

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #4 on: July 26, 2011, 03:11:39 PM »
Actually, where does is state that they will send you a 1099?
That's the law.
I'm sure it says it somewhere in the fine print.
assuming u can use the 5k gift card for anything u can use it to cover the taxes and just keep the miles
You get charged a nice % to pay taxes with a cc.
Plus assuming a 40% combined federal+state+local marginal rate you're looking at owing more than $6K in taxes.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline myb821

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Re: Amazing Raffle - AA covered trip
« Reply #5 on: July 26, 2011, 03:12:41 PM »
That's the law.
I'm sure it says it somewhere in the fine print.You get charged a nice % to pay taxes with a cc.
Plus assuming a 40% combined federal+state+local marginal rate you're looking at owing more than $6K in taxes.
i meant use the gc for ur spending and use that cash to pay taxes

Offline bosoxfan

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Re: Amazing Raffle - AA covered trip
« Reply #6 on: July 26, 2011, 04:23:33 PM »
Plus assuming a 40% combined federal+state+local marginal rate you're looking at owing more than $6K in taxes.

Why assuming the max rate?

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #7 on: July 26, 2011, 04:27:05 PM »
40% is hardly the max marginal rate for federal+state+local taxes.
Max is probably closer to 50%
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Offline good sam

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Re: Amazing Raffle - AA covered trip
« Reply #8 on: July 26, 2011, 04:58:37 PM »
Enjoy paying taxes on $15,350 if you win...

Tax on the miles?  Why is this different than any signup bouns?
If you don't care why would you comment?
HT: DMYD

Offline bosoxfan

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Re: Amazing Raffle - AA covered trip
« Reply #9 on: July 26, 2011, 05:36:10 PM »
40% is hardly the max marginal rate for federal+state+local taxes.
Max is probably closer to 50%
Most people who pay are in the top bracket get other breaks which reduce their overall rate, and 99% people don't pay anywhere near 40% in total taxes.

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #10 on: July 26, 2011, 09:03:18 PM »
Tax on the miles?  Why is this different than any signup bouns?
A signup bonus is considered a purchase rebate which is not a taxable event.  A sweepstakes winning is always a taxable event and any prize won $600 or higher must be reported to the IRS.

99% people don't pay anywhere near 40% in total taxes.
94.7% of all statistics are made up on the spot.
And I'm not talking about total taxes, I'm talking about a marginal tax rate.  Marginal means that any income earned on top will be subject to the highest rates.  Adding a $15K prize adds $15K in income to your marginal tax level and can bump you into a higher tax bracket.

Care to back up your statement?

Take a single NY'er making a decent, but not extraordinary salary, say $85,000. 
His marginal federal rate is 28%.
His marginal state rate is 6.85%
His marginal city rate is 3.65%
That's a 38.5% marginal rate.  Any additional income earned will cost him 38.5%
Oh, and if he commits the sin of being self-employed then tack on another 15.3% in SE tax or half that if he's an employee.

In CA if you make more than $46K you owe the state alone 9.3% in income tax.

So what kind of tax breaks are we talking?  Even if he donates a lot to charity and gets a deduction for that he still sill pay his marginal rate on additional earnings.
« Last Edit: July 26, 2011, 09:13:35 PM by Dan »
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline txtmax4

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Re: Amazing Raffle - AA covered trip
« Reply #11 on: July 27, 2011, 01:05:42 AM »
Can you decline the prize?
If You See Something, Say Something!!

Offline SuperFlyer

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Re: Amazing Raffle - AA covered trip
« Reply #12 on: July 27, 2011, 08:24:27 AM »
Enjoy paying taxes on $15,350 if you win...

If you win, give it to me, I will deal with the taxes.

Offline SuperFlyer

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Re: Amazing Raffle - AA covered trip
« Reply #13 on: July 27, 2011, 08:29:02 AM »
It seems that one can play more than twice.

Offline bosoxfan

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Re: Amazing Raffle - AA covered trip
« Reply #14 on: July 27, 2011, 12:01:48 PM »
A signup bonus is considered a purchase rebate which is not a taxable event.  A sweepstakes winning is always a taxable event and any prize won $600 or higher must be reported to the IRS.
94.7% of all statistics are made up on the spot.
And I'm not talking about total taxes, I'm talking about a marginal tax rate.  Marginal means that any income earned on top will be subject to the highest rates.  Adding a $15K prize adds $15K in income to your marginal tax level and can bump you into a higher tax bracket.


Care to back up your statement?

Take a single NY'er making a decent, but not extraordinary salary, say $85,000. 
His marginal federal rate is 28%.
His marginal state rate is 6.85%
His marginal city rate is 3.65%
That's a 38.5% marginal rate.  Any additional income earned will cost him 38.5%
Oh, and if he commits the sin of being self-employed then tack on another 15.3% in SE tax or half that if he's an employee.

In CA if you make more than $46K you owe the state alone 9.3% in income tax.

So what kind of tax breaks are we talking?  Even if he donates a lot to charity and gets a deduction for that he still sill pay his marginal rate on additional earnings.

No it doesn't bump you into a higher bracket. Any earnings over the amount of the old bracket is taxed at the higher rate. Besides, the effective tax rate is far more indicative of the costs of winnings.

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #15 on: July 27, 2011, 12:24:11 PM »
No it doesn't bump you into a higher bracket. Any earnings over the amount of the old bracket is taxed at the higher rate. Besides, the effective tax rate is far more indicative of the costs of winnings.
Let's say a single NYC'er will make $80,000 this year.
Federal=16,125 ($4,750 plus 25% of excess over $34,500).
NYC=2,801
State=5,083
Total=$24,009
Ignoring deductions/exemptions as well as SE tax issues. That's a 30% effective rate.

Now you're adding $15,350 to that.
Federal 3,650 at 25%=913. 11,700 at 28%=3,276, so $4,189 in taxes.
State is 15,350 at 6.85=1,051
Citi is 15,350 at 3.65=560

So he owes $5,800 in taxes.  That's a 37.8% tax rate.  If you just looked at his effective tax rate excluding the winnings you would assume 30%.  Why is 30% more indicative of the cost of winning?

That's also not counting for any other myriad of tax benefits that may be phased out as he has more income now...
« Last Edit: July 27, 2011, 12:27:12 PM by Dan »
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Offline bosoxfan

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Re: Amazing Raffle - AA covered trip
« Reply #16 on: July 27, 2011, 04:24:55 PM »
most people have dependents that significantly reduce their income, if we're sticking to the 80k example. But you're correct single taxpayers get screwed.

Offline Dan

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Re: Amazing Raffle - AA covered trip
« Reply #17 on: July 27, 2011, 05:15:47 PM »
most people have dependents that significantly reduce their income, if we're sticking to the 80k example. But you're correct single taxpayers get screwed.
Not sure what your point is.
Dependents definitely can reduce your effective tax rate.  However winning a prize is not reduced by having dependents, the prize goes straight to your top (or higher than your top) marginal rate.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline AsherO

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Re: Amazing Raffle - AA covered trip
« Reply #18 on: July 27, 2011, 07:35:12 PM »
Not sure what your point is.
Dependents definitely can reduce your effective tax rate.  However winning a prize is not reduced by having dependents, the prize goes straight to your top (or higher than your top) marginal rate.

And to add insult to injury, they make you pay tax on the full FMV of the prize, not what it cost the sponsoring company (i.e. the 1st class tickets don't cost AA $10k or anywhere near that).

Offline bosoxfan

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Re: Amazing Raffle - AA covered trip
« Reply #19 on: July 28, 2011, 09:23:33 AM »
Not sure what your point is.
Dependents definitely can reduce your effective tax rate.  However winning a prize is not reduced by having dependents, the prize goes straight to your top (or higher than your top) marginal rate.

The prize is not in a special category. It is part of your earned income for the year, which is reduced by above the line deductions. So someone with a wife a two kids isn't have a very high effective rate even with the winnings.