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What is a Monetary Award?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 19 November 2016
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A monetary award can be any form of compensation or bonus made in monetary form. This can include work bonuses, lottery winnings, scholarships, prizes in a competition, or awards that are part of a judicial decision. Though winning or receiving a monetary award can be cause for a celebration, it is important to remember that most sizable awards are subject to taxation, which can cut into the total profit of the award.

Businesses sometimes offer a monetary award as a means of motivating employees. This type of award can take several different forms, depending on the structure of the company and the goal of the award. In sales businesses, bonuses and awards are often given to top performers to reward them for superior work and motivate other workers to try and match or improve a top level of performance. Some companies may give year-end bonuses to workers as a way of thanking them and improving morale and loyalty. A business may also offer a monetary award for a short-term goal, such as to the department that best improves efficiency or has the lowest number of sick days. Monetary awards in business may be given as a one-time payment or in regular intervals.

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Winning a scholarship often takes the form of a monetary reward. With a scholarship, receiving the award may be dependent on enrollment in a school or educational program; money may be given directly to the winner or given directly to the school to pay for expenses such as tuition or books. A scholarship award may be given on various criteria, including individual merit, grades, ethnic or national background, or for performing actions such as writing a great essay or starting a community service project.

Competitions may sometimes hinge on a monetary award. Game shows, lotteries, or skills contests may draw attention and applicants through advertising a monetary award for the top performer or top team. While prizes for competitions may be extremely high, they are almost always taxed. Financial experts often warn competition winners to immediately hire an accountant or financial manager after a significant win, as people are sometimes liable to underestimate the amount of tax that will be required and thus drive themselves into debt by spending more than they have actually won.

A monetary award can sometimes be the result of a court case, and is frequently a factor in divorce decisions. In a divorce, a judge may be responsible for dividing a couples assets equally. If it is impossible to divide assets to an exact equivalence, a judge may award one spouse monetary compensation from the other spouse that equalizes an unbalanced asset division.

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Reminiscence
Post 2

I was given a monetary award for having the most sales in my district back when I was an outside sales agent. I have to say that cash awards can be very motivational. I paid off my car loan with the award money. The company stopped offering a monetary award program a few years after I left, but it did increase the commission percentage per sale, which is essentially a monetary award itself.

Cageybird
Post 1

I've heard some contestants who win a monetary award on a game show are led to a room backstage where a tax collector tells them how much they owe on the winnings. At least they can cash the check and dole out the taxes. I think contestants who win non monetary awards, like cars or vacations, must pay the taxes before they can leave the state. Some people end up returning the prizes because they can't afford the taxes on them.

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