We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Cash Awards?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Cash awards are single-time payments of cash offered to winners of contests and as a form of employee benefit. They are considered a form of income and must be declared on tax paperwork. One problem sometimes encountered with cash awards is that since taxes are not always deducted at the time the award is made, the recipient may not be aware that taxes will need to be paid on the income, and may not make arrangements to save money for the tax bill.

In competitions, the prize for winning may be a cash award, and people can also request cash awards in lieu of physical items. Contests with prizes like trips, cars, and so forth can offer an equivalent cash value to winners. Winners typically get their cash awards in a lump sum, although sometimes a series of payments can be arranged to distribute the award over several months or years. There may be tax advantages to accepting a cash award in installments.

Employees are sometimes offered cash awards as bonuses. People can get them for good performance, meeting project goals, or performing above and beyond expectations. They are not part of an employee's regular wages and salary, although they are sometimes used to provide a retroactive pay increase. The cash award may be attached to a paycheck or provided in a separate payment, depending on policies at a company, and it will be declared on tax documents by the employer so the authorities know to count it in an employee's earnings.

When people receive cash awards, they will be required to disclose them when filing taxes for the year. People receiving large awards may want to consult an accountant about the tax implications. An accountant can help people estimate how much they will owe so they can set funds aside to pay the tax bill. Accountants can also provide information about how to reduce overall tax liability to make a tax bill smaller by accounting for business expenses, allowable personal expenses, charitable donations, and so forth.

For certain types of notable recognitions and prizes, like the Nobel Prize, it is traditional to offer a cash award to recipients, but recipients do not conventionally keep the award. Although not required to, most Nobel winners donate their cash awards to charities related to their areas of interest and research. Often, these donations are publicized to draw attention to the charity honored with the winnings.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.