IRS is going to get a copy of the 1099 or W2G whatever you got and match it with your tax return.
Here is what you should do:
Report the winnings on line 21 as Misc Income
Determine the Fair Value of the winnings (what could you have sold the trip for, what would you pay for it, call company that sponsors it, whatever you can to determine the fair value).
Then for example say the 1099 is for $3,000
you determine value is $500
You make an entry for the $3,000 and then a negative entry for the $2,500 to get to $500 being taxed.
You have fully disclosed this to IRS, and yes, they may question it and disagree with you. If not reported it will be added to your income for $3,000 income plus interest.
Click on “Take me to my return” button.
Click on Federal tab (left-hand side of screen).
Click in Wages and Income (near top of screen)
Scroll down to Less Common Income.
Click on Start next to Miscellaneous Income.
Click on Other reportable income.
Follow the questions and report: 1099 for $$$ and then 2nd entry for Adjusted to actual FMV and negative amount.
I would purchase Audit Defense also when you file your return.
