How Do They Tax You?

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B16RacerN2NR

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I buddy of mine at work is selling raffle tickets for his church. First prize is of your choice out of 25K cash, a mini cooper S, a 04 stang, IS300, or benz, i don't know what kind of benz so don't ask. My question is if I win, how do they figure how much to tax you on your next income taxes? i'm just trying to see what would be a smartest choice out of the prizes. I hope i worded it correctly so you guys can understand what i'm asking.
 
I think it is a gift tax, not income, and I think the tax rate is like 30 something %. Outrageous if you ask me.
 
No, its income....

Prize winnings are included in the long list of "other" income that the tax law says is taxable. And it's not just limited to cash awards. You've got to pay taxes on the fair market value of any property you win. So get ready to come up with some cash for Uncle Sam to cover that new Corvette the local Chevrolet dealership presented to you as part of its latest promotional contest.

Be careful when reporting the amount of a noncash prize. In most cases, companies and groups that award prizes, both cash and property, will send you a 1099 form declaring the value of what you won. If your tax return reports substantially less than what the giver claims, your under-reporting could mean a long, hard look from an IRS auditor.



ALWAYS take the cash or cash equivilant... The person paying the prize will pay Uncle Sam and then pay you. You hve to list it on you next years tax return but the tax (as much as 55%) will have already been paid!
 
Originally posted by ahedau@May 6 2004, 02:47 AM
ALWAYS take the cash or cash equivilant... The person paying the prize will pay Uncle Sam and then pay you. You hve to list it on you next years tax return but the tax (as much as 55%) will have already been paid!

Good call. So do you know if they will almost always go with the full on 55%?? or is it like a "what mood am i in today" decision?
 
Originally posted by B16RacerN2NR@May 6 2004, 02:31 AM
...buddy of mine.........selling raffle tickets......church....if I win.......smartest choice out of the prizes.........

something smells fishy...... <_<


unless you are actually a really lucky guy........ :blink:

Don't count the chickens until they hatch...as in...don't decide the prize till you've won.... B)
 
Originally posted by Airjockie+May 6 2004, 05:29 AM-->
B16RacerN2NR
@May 6 2004, 02:31 AM
...buddy of mine.........selling raffle tickets......church....if I win.......smartest choice out of the prizes.........

something smells fishy...... <_<


unless you are actually a really lucky guy........ :blink:

Don't count the chickens until they hatch...as in...don't decide the prize till you've won.... B)

:werd:
haha
 
So do you know if they will almost always go with the full on 55%?? or is it like a "what mood am i in today" decision?


depends on what tax bracket you're in to begin with and what state your in
 
are you trying to hint that we are going to rig this raffle?? ;) J/P...it's nothing like that. Me and him were talking about winning prizes like that and he was telling me how him and his wife won some tickets to a micheal jackson concert through KIIS and he said they taxed him like $1000 and what they got was worth about 5 grand. I was just wondering, that's why i asked. also, they won the tickets because his wife used to work for KIIS FM...now that's rigged
 
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