Exactly How much is deducted in prize taxes??
2007-05-14 14:27:00 · 5 answers · asked by David M 2 in Business & Finance ➔ Taxes ➔ United States
This has been helpful thus far but how about in Texas
2007-05-15 04:34:36 · update #1
Prize money is taxed at your marginal rate. Sometimes taxes are withheld and sometimes not, so it is not possible to give an exact amount. The amount withheld could be anywhere from zero to 25%.
If more is withheld than you owe, you will get a refund. If too little or none is withheld, and the prize is going to cause your tax liability to go up substantially, you should send in estimated tax payments to avoid an underpayment penalty.
There is no personal income tax in Texas.
2007-05-15 18:47:00 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
It's not unusual for 25% to be withheld from major prizes for federal income tax, although your actual tax liability on the prize might be more or less than that, depending on your other income. When you file your return for the year, the prize is shown as income, and the amount taken out for taxes is shown as withholding. Your tax liability is figured on your entire taxable income. If you had more withheld than your liability, you get the rest refunded - if you didn't have anough withheld, you have to pay the rest. Tax brackets go as high as 35%.
State and local laws vary for taxes. Some states don't have an income tax, and some range up near 10%. If the prize is a state lottery, in most states it's not subject to state income tax.
2007-05-14 14:55:31 · answer #2 · answered by Judy 7 · 3⤊ 0⤋
Normally they are subject to Federal withholding at 25%. You can ask for more to be withheld though they don't have to comply with that request. They must be added to your total income at tax time where you'll settle up with the IRS. You'll get a credit for the tax withheld. If you live in a state with an income tax, state tax may also be withheld. Check with your state tax department on the amount.
2007-05-14 19:57:28 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Depending on which state you reside in, winnings may be subject to federal, state, and/or local income taxes, depending on jurisdiction requirements.
Depending on your other income and the amount of your winnings, your federal tax bracket can go as high as 39.6%. They could also be subject to state tax, so the tax could go as high as 50%.
2007-05-14 14:36:27 · answer #4 · answered by Anonymous · 0⤊ 3⤋
In canada Nothing
2007-05-14 14:34:46 · answer #5 · answered by Grand pa 7 · 0⤊ 5⤋