2007-07-25 01:44:20 · 8 answers · asked by firebird 1 in Business & Finance ➔ Taxes ➔ United States
The IRS requires that 20% of your winnings be withheld at the time they are paid. Depending on your tax bracket when filing your personal return, you may owe more or less than the 20%.
2007-07-28 12:42:54 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It depends on your tax bracket and the state you live in.
Federal taxes withheld are any where from 25%-40% (depending on your tax bracket) and State taxes are 5%-20%, Even then it might not cover all of the taxes due. Keep in mind that you may receive less than half of the prize money and still owe more taxes at the end of the year.
By the way, this is not special because it is prize money. The more you make as income, the more taxes you pay, not just in dollars but in percentage as well.
2007-07-25 01:57:45 · answer #2 · answered by Robin C 5 · 1⤊ 1⤋
Depending on your definition of winning and your tax situation. If it's a gambling win, you can offset your losses against it during the same time. If it's a prize - lotto or something it is all taxable as ordinary income and with state and federal it could be 40%. There are some winning that are not taxable but you didn't supply enough information to determine that.
2007-07-25 03:27:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
there are two cases
case 1: you receive 10k but did nothing to personally enter or qualify for this specific award. Example: the McArthur prize is awarded to deserving thinkers and researchers who are nominated by their peers for work they've already done. Same with Nobel Prize. this type of money is free AND you likely don't have this type
case 2: the 10k is taxed like any other ordinary income you've received. Example: lottery winnings are taxed as ordinary taxable income. See next case to understand why FICA/Medicare tax does NOT attach.
case 2b: some folk can make a case that they are professional gamblers -- in this limited case, their provable losses can be deducted from their winnings and only the net profits are taxable. This would be business income and is subject to both income taxes and FICA/Medicare.
you likely aren't in this class either -- pros know they are gamblers and the tax reasons for having that tax status
clear?
2007-07-25 01:52:47 · answer #4 · answered by Spock (rhp) 7 · 0⤊ 2⤋
It is included on the other income line and taxed as regular income at whatever bracket you are in. Don't forget that if you itemize on Sch A you can put down your gambling losses up to the amount of your winnings.
2007-07-25 03:15:18 · answer #5 · answered by acmeraven 7 · 1⤊ 1⤋
Not enough info.....
It depends on what tax bracket your other income puts you in.
A safe bet would be $2500 + state tax if applicable.
2007-07-25 01:47:54 · answer #6 · answered by Wayne Z 7 · 0⤊ 0⤋
It will be taxed as any other income, so your marginal tax rate will dictate the amount of tax.
2007-07-25 01:52:03 · answer #7 · answered by Anonymous · 2⤊ 0⤋
I agree - it does depend on your tax bracket - if you're in a top bracket you would pay close to $4000. (But hey, $6000 left is nothing to sneeze at.)
2007-07-25 01:52:37 · answer #8 · answered by Anonymous · 0⤊ 0⤋