or do they just get a 1099 tax form at the end of the year?
Do they have to pay them in order to title it or insure it?
Let's say you won car, if you decided to sell it to make some easy $$, do you have to pay the taxes on it BEFORE you can even claim it as yours in order to sell the thing?
You see, I have all these plans of winning a car, and I want to sell it. I just want to know what to expect when the day comes....lol.
2007-03-26 18:11:47 · 5 answers · asked by pancakes & hyrup 6 in Business & Finance ➔ Taxes ➔ United States
For anyone who's ever bought a car, when you title it you have to pay taxes at the DMV (Secretary of State, in MI) in order to title it, right? They ask the sale price. If you win it, there's no sale, yet you DO have to pay taxes. Confusing.
2007-03-26 18:17:13 · update #1
If you win a car, you'll be taxed twice. First, the contest promoters will issue a Form 1099 for the FMV of the vehicle. This is taxable to you as ordinary income. Then the DMV will hit you for the sales & use tax when you register the vehicle.
If you decide to sell the vehicle -- may of the folks who received cars from Oprah on that well-publicized stunt had to sell to pay the taxes -- you'll pay tax on the FMV of the vehicle when you receive it but the proceeds from the sale will not be taxed.
If you read the fine print for the contest you'll note the discalimer that the winner is responsible for all taxes.
On extremely rare occasions the sponsoring orgainization is required to withhold income taxes on the prize, usually because they've been caught failing to report winnings in the past. In that case you'll be reqired to hand them 20% of the FMV in order to receive the prize but your Form 1099 will reflect the taxes withheld. This will all be spelled out in the fine print. If you refuse to pay over the withholding amount you'll lose the prize and an alternate winner will be accepted.
2007-03-26 23:12:33 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
yes you will have to pay taxes on it when you register it. The state will most likely have rules in place for a car that is won. I know TX does the sweepstakes sets a "price" for the car and that is what the taxes are paid on. It might be less than what the car is actually worth or the same, or they might ask you what you paid for the car then I dont care you can say whatever you want I will not tell.
2007-03-26 18:23:43 · answer #2 · answered by a03nathanb 2 · 0⤊ 0⤋
If you were to be so lucky as to win a car you would have to consult the rules of the contest but the org.holding the contest would probably say that taxes on all prizes are the recipients responsibility.I am positive that taxes would have to be paid BEFORE you would take possession.You would also have to title it in your name and license it(another tax) before you sold it.If you won a $50,000 car and had to pay $4,000 or more to take title of your prize,so what! are you THAT CHEAP that you would not pay the TAX for a net gain of OVER $40,000+?
2007-03-26 18:21:51 · answer #3 · answered by tenacious 1 2 · 1⤊ 0⤋
Some ppl are always looking for a freebie,arnt they?
2007-03-27 02:02:22 · answer #4 · answered by Anonymous · 0⤊ 0⤋
you pay them on your income taxes.
2007-03-26 18:14:36 · answer #5 · answered by Anonymous · 0⤊ 0⤋