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medgirl2001
March 7th, 2006, 4:07pm
Hi all, I've been trying to read through the threads and get an answer to my question, but I can't find it.

I won a private screening of the new Dave Chappelle movie for 101 people. The ARV is $1010. THey did send me an affidavit and a W-9 form, so I know I will be responsible for taxes. I am trying to figure out how much my taxes will be on this prize. I don't want to accept the prize if it's too much. The prize would be totally fun, but why pay for all my friends to go to the movie? I'll just pay $10 and see it myself! I'm new here, and don't even have 100 friends here! ;)

I have gotten mixed responses. One accountant said I would be paying 25-30% of the amount in taxes, another said 30%+, and another said, it shouldn't be very much, like less than $100.

What has been your experience on taxes on a prize worth about $1000?. Thanks in advance for any responses!

guruwan2b
March 7th, 2006, 4:10pm
Add the $1,000 to what your taxes were for last year and see what difference it would have made to last years taxes. If it doesn't put you in a different tax bracket, it probably won't be too much.
You can also adjust your weekly paycheck a little to cover when you do next year's taxes.
Kim

AmberMoon
March 7th, 2006, 4:13pm
Agree with the poster above, you simply are adding it to your income, Prize values are considered income for income taxes so if you make 40k a year and you won a 1k item you would be saying you made 41k a year ( Not sure where it goes on taxes but this is just so u can figure it out)

maudie
March 7th, 2006, 4:15pm
I believe you need to add in as income under "sweepstakes, wins" not just regular income. the tax on prize money/gifts is a little higher I believe. If you have Turbo Tax there is a special place your enter prize money/gifts.

tofu
March 7th, 2006, 4:16pm
It depends quite a bit on your own tax bracket, your deductions, and a whole lot of other stuff. You can ballpark it around 25% if you are in a middlish tax bracket, but if you've got a lot of deductions, then it might end up being a smaller percentage.

In response to the above post, the prize amount will get added to your income as "other income" on line 21 of Form 1040, and it will be treated like regular ol' income, tax-wise - taxed at the same amount as your other income.

retrobruce
March 7th, 2006, 4:22pm
I have gotten mixed responses. One accountant said I would be paying 25-30% of the amount in taxes, another said 30%+, and another said, it shouldn't be very much, like less than $100.


To answer that question, they would need to know what your income would be for the year and then all your deductions and all that. The first two gave reasonable answers, based upon the limited info that I have about what you may have told them.

The third one may be correct also, if you have a relatively low adjusted gross income and high deductables.

To give an accurate answer, we would need to know a lot of personal financial data about you that you surely don't want to make public here.

maryte
March 7th, 2006, 4:26pm
For example, let's say your total income last year was $10,000 and you paid $500 in federal taxes. You made (and paid) the same amount this year, but you won a prize with a 1099 of $1000. Your total income for the year is now $11000. Your taxes might *still* be $500, but that extra $1000 could bump you up a bit and your taxes might be $550 for year.

Please keep in mind that 1) I'm just using these numbers to try to help clarify how this works. I have no idea what the federal taxes on $10K (or $11K) would be; and 2) I'm not an accountant. However, if you use a tax program, you can play with it to see what the impact of *any* 1099-misc would have on your tax obligation. It might be a little different next year, but you'd have a good estimate.

I can tell you that in 2004 I won airline tickets with a 1099 of $800. This made a difference of about $75 dollars in our taxes (but we've also got a mortgage deduction). It will be slightly different for everyone.

wackydackydoo
March 7th, 2006, 4:44pm
Sweepstakes wins go on the tax form as "Other Income" per the IRS website.

medgirl2001
March 7th, 2006, 5:02pm
Thank you all for your quick responses! One of my friends also suggested, I could accept the prize, but donate it to the university here and they could use it as a fundraiser. He said in that way, I wouldn't pay any taxes. He suggested I don't even report it, but I don't feel comfortable w/ that. I would think I could donate it, report it as misc income, but then put that I made a $1000 donation (however I won't get a tax receipt for this). Do you guys think this is legit way of doing it?

If I accept the prize for myself, I only want it if the taxes are $100 or less. One accountant stated like Mary, that the taxes would be about $100 or less, not too significant. But if it's 25% or more, that's too much for me to accept! I don't want to disclose all my finances here, but I received a work check for $1038.46 gross, and had $189 deducted, is that pretty close to how much taxes I will pay on a $1000 win?

THANKS! :gift:
I have turbo tax at home and will try to work out, but any advice will help. I'm clueless about finances!

wackydackydoo
March 7th, 2006, 5:06pm
If you won $1,000 and wanted to donate it, you would first have to report it as "Other Income" then deduct it as "Charitable Donations". However, since $1,000 is over the minimum limit allowed to report without a receipt, you will have to get a receipt from whoever you donate it to.

chuckybaby
March 7th, 2006, 5:35pm
If they send you an affy for $1000 you have to report it as it is being sent to the IRS...
This is just guessing but if you had to pay taxes last year...add another amount, from say, $75 on the low end to $290 on the high end to your taxes. If you got a refund, subtract those amounts from your refund to see what you would get this year...

Carson Daly Most Requested - Dave Chappelle Block Party Sweepstakes

1x per person | home page | 2 notes · · link

Prize: Private movie screening for 101 people of Dave Chappelle's Block Party in winner's hometown (ARV $1,010).

official rules · archive | Open to residents of the 50 United States & D.C. 18+ (void in RI)

expires Sunday, February 26, 2006 @ 11:59pm PTStarted 2/13/06 - Submitted 2/13/06

Search Relevancy Score: 12.42

I do not enter this type of sweep for the fact that I would be paying for these people and they wouldn't....

Maybe you could have it as "donations accepted" at the door........to help offset your taxes.

hwnhrt
March 7th, 2006, 5:38pm
And be sure to read the rules.....some prizes cannot be transfered, etc.

Congratulations on the win! :)

pambanter
March 7th, 2006, 5:51pm
#1. The tax information will appear as a 1099 misc. and is put into misc. income.
#2. Unless you itemize ALL your deductions and they equal out to more than the standard deduction the whole charitable contribution deduction thing probably won't work for you.
#3. The ONLY way to have any kind of idea is to run your taxes through again with 1000 added on under misc. other income and see what that does.

These are good questions to ask yourself now, before you go winning something else that you don't want to pay taxes on.

susan1215
March 7th, 2006, 6:02pm
#1. The tax information will appear as a 1099 misc. and is put into misc. income.
#2. Unless you itemize ALL your deductions and they equal out to more than the standard deduction the whole charitable contribution deduction thing probably won't work for you.
#3. The ONLY way to have any kind of idea is to run your taxes through again with 1000 added on under misc. other income and see what that does.

These are good questions to ask yourself now, before you go winning something else that you don't want to pay taxes on.

Good point, I don't enter these types of sweepstakes because I don't have 100 friends and if I did I wouldn't want to pay taxes on taking them to a movie.

jklkj
March 7th, 2006, 6:15pm
I get the actual value of the prize and that is what I pay for. I have found they overestimate the value of the prize All the time.
You pay taxes on your personal tax bracket. An accountant would know that information based on your 2004 taxes.

jklkj
March 7th, 2006, 6:18pm
I also don't enter these types of sweeps.
I don't know 100 people that i would want to sit in a dark room with.
Donating is a great idea but find out if they will accept it first.

cherylbas
March 7th, 2006, 6:37pm
I just went through this myself on a total ARV of $10,000 prize package to Belgium. I had to contact my accountant and she showed me what it would costs me this year if I had won the prize - it was an additional $3,200.00. But, I am in a high tax bracket as I'm single, no dependents, not a whole lot of deductions anymore, and my income is decent. So, it does totally depends on your individual circumstances. And if I make more this year, those taxes will be higher yet. But it is worth it, isn't it???

stan1162
March 7th, 2006, 6:47pm
Basically( what is the percentage in taxes you pay relative to your income?? Just for example, you make 45,000.00 and you paid 11,700.00 in taxes, your percentage would be 26%. So figure 26% of the "ARV" and you get an idea of what the taxes would be. Then you ask yourself, is that worth it. I do this with every sweep. I am in a very high tax bracket 30+ %, so I am extra aware of the potential taxes I pay.

guava
March 7th, 2006, 7:05pm
I think you’ve gotten good advice from everyone so far but as an anal-retentive, detail-oriented, accountant geek, I thought I’d provide a little more information.

Once you accept the prize you will receive a Form 1099 showing what the distributor believes to be the fair market value of the prize package. The IRS also receives a copy of the 1099. You need to report the fair market value shown as ordinary income on your tax return even if you decide to give away the prize.

To figure out an estimate of the amount of tax you are likely to pay on the prize you can add the $1,000 to your other taxable income and check out the following to see what bracket you are in. Assuming you won the prize in 2006 and

you are single you pay
10% on your taxable income under $7,550
15% on your taxable income between $7,550 and $30,650
25% on your taxable income between $30,650 and $74,200
28% on your taxable income between $74,200 and $154,800
33% on your taxable income between $154,800 and $336,550
And 35% on your taxable income over $336,550

you are married you pay
10% on your taxable income under $15,100
15% on your taxable income between $15,100 and $61,300
25% on your taxable income between $61,300 and $123,750
28% on your taxable income between $123,700 and $188,450
33% on your taxable income between $188,450 and $336,550
And 35% on your taxable income over $336,550

So, for example, if you are married and have taxable income of $50,000, you can assume that extra $1,000 of winnings will result in $150 of tax ($1,000 x 15%). Please note that depending on where you live your state may also tax the winnings.

Regarding the contribution, a couple things to keep in mind…as pointed out by another poster, if you don’t itemize then you will NOT get a tax benefit for contributing the prize. Although it is a nice gesture from a charitable perspective, you would end up being taxed on the winnings but not receive any offsetting deduction.

On the other hand, if you DO itemize, then you will most likely be able to deduct the value of what you gave the charity. You will need to make sure that you give it to a qualified exempt organization and, since the value of the donation is over $250, you will need to obtain a written acknowledgement from the organization.

As others also mentioned, it is always a good idea to talk to your accountant or tax preparer for information relative to your specific situation.

Congratulations on the win. :)

pambanter
March 7th, 2006, 8:42pm
But, keep in mind, taxable income is the income AFTER all your deductions (per person exemptions and standard deduction). And without any Earned Income Credits or education credits or anything.

So, using the previous poster's numbers, for single, no dependents, without any of the above creditsit would be more like:

10% on your taxable income under $7,550 ($15,750 gross income - $3, 200 exemption - $5,000 standard deduction = $7,550)

So, once again, the simplest way to figure this is to take out last year's taxes, add 1000 to the total and then look up the total in the tax tables. If you make about the same this year as last year, this will give you the best idea.

mariana
March 7th, 2006, 10:16pm
For medgirl2001 --
Did you win this from Premier Radio Network? I had a message on my machine tonight saying I also won a grand prize involving Dave Chapelles movie. Of course, the office was closed after I got home. I have an 800# to call tomorrow. Do they give you a choice of what theatre you go to or what day/time you have the screening??
Congrats!