This was actually new to me when filing my taxes this year as last year I actually won a contest prize for a drone video that I created which awarded me one thousand dollars US which was a nice surprise. At first I thought this would be like a lottery winning where here in Canada you wouldn’t have to claim it as income. However, apparently because this was a competition of sort it could be placed in the same category as someone winning a medal and money by competing in the Olympics. So instead of it being just a lottery type of winning, it could be dubbed as a “Prize for achievement” in which you would have to claim it as income.
I was just thinking how there is always something it sems like where the tax man wants a piece of your money huh? But what this reminded me on too was how if I just spent the money before knowing all this I would have ended up spending more than I intended since I couldn’t technically use the full one thousand US dollars. It’s almost like how self-employed people get into financial trouble where they don’t set aside any money to pay for the year end taxes just to get surprised later.
Always make sure to try and ensure you can actually spend the full amount you have. If anything, just save it until you know for sure as you could get interest on it in the meantime as an example.