I have been on Disability for a little over 7 years. I am permanently
disabled. I just won a $1000.00 prize from EBay. I don't file a yearly
tax form. How do I go about reporting the prize and paying the tax.
How do I find out what the tax on this prize is? Thank you for your
help.

Congratulations

At first I worried that your prize might be part of some scam, but I
see Ebay is running a $1,000 contest.  Just make sure your email and
Paypal information is definitely going to them and not to any third
party.

You don't have to do anything immediately tax-wise.  Assuming your
prize is paid to you this year (I gather they will deposit the funds
into your Paypal account), you will receive a Form 1099-Misc from Ebay
in January 2006.
http://www.irs.gov/pub/irs-pdf/f1099msc.pdf

If even with that $1,000 your 2005 income is small enough that no tax
is due, then you won't need to file.  I'd suggest that you fill out a
tax return with your income information next year, to make sure that
the tax comes up zero.

You don't need to worry about estimated tax or withholding this year,
because one of the exceptions is that if you owed no tax in 2004, you
needn't worry about withholding or estimated tax in 2005.

Search terms used:
1099-misc site:irs.gov

Thanks for letting us help, and again, congratulations

Google Answers Researcher
Richard-ga

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Clarification of Answer by richard-ga on 18 Mar 2005 09:39 PST

"I'd suggest that you fill out a tax return with your income
information next year, to make sure that the tax comes up zero."

When I said "fill out a tax return" I meant as a draft - - if the tax
does come up zero there will be no need to send the return in.

-R

Thank you for your answer.  I am sorry that I only just noticed that I
had additional answers and comments.  I appreciate the time you took
to answer and the thouroughness and clarity of your answer.

Congradulations, I myslef tried to hunt down some of the clues. But
with no luck. The scas were running rampet on this one. Auctions were
getting shut down left and right do to certain illegal postings.