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  Old  June 22nd, 2012, 8:22pm     #1
n8sense is offline
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What is the average percentage you pay in taxes on a win?
How much, on average, do you guys pay for taxes on wins? I know it's going to vary quite a bit but I'm just trying to get a good idea. Is it different for different types of prizes (vacations vs electronics) or the same regardless?

I personally only make about $20,000 a year but with my wins it will bring that up to closer to $30,000.

Should I expect to pay about 10%? Or less? Or more?
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  Old  June 22nd, 2012, 8:37pm     #2
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depends on your tax bracket. Add the value of all your wins to your annual income and I think the IRS website or perhaps by googling you can find the tax bracket for your income.


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  Old  June 22nd, 2012, 8:42pm     #3
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congrats on increasing your income by 50%. That's amazing. I have always just added the value of my wins to my income and estimated my taxes that way. Then at tax time I let the software do the math.

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  Old  June 22nd, 2012, 8:43pm     #4
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I think it's around $300 for every $1,000 win so around $3,000 for that $10,000 prize.

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  Old  June 22nd, 2012, 8:44pm     #5
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Taxes are the same on ALL prizes be it an Xbox or a HUGE cash win. They ALL must be reported (by law anyway, some people don't follow the law) and are reported as "Other Income".

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  Old  June 22nd, 2012, 10:03pm     #6
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I have never won enough to raise my tax bracket so I have done ok. I have broken even a couple years but thats better than paying. And yes, I claim all my wins whether it be a T-shirt or an IPod. I just keep it in my mind that if and when I do win big things will change. Congrats on the good wins!!

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  Old  June 22nd, 2012, 10:07pm     #7
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Great information. Speaking of taxes, can you also deduct any out of pocket expenses you have in order to accept / use the prize? Such as a trip that doesn't include transportation, food, etc.

Also, if trips seem to be inflated as far as the posted value is concerned, do you have to use the number the sponsor valued it for?
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  Old  June 22nd, 2012, 10:19pm     #8
sallykay is offline
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Quote:
Originally Posted by Daisylee View Post
Great information. Speaking of taxes, can you also deduct any out of pocket expenses you have in order to accept / use the prize? Such as a trip that doesn't include transportation, food, etc.

Also, if trips seem to be inflated as far as the posted value is concerned, do you have to use the number the sponsor valued it for?
The answer is no, but you'll find some sweepers who disagree. If you have a business you CAN put the win to use, then expense/depreciate it, but of course, you have to claim the value of the win first.

You can look for values on your own--I'd print them out to document.

Ask a couple tax professionals; don't take my word for it.

OP, it's no telling how much additional tax liabilty, if any you'll have. There's no b/w answer.

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  Old  June 23rd, 2012, 7:58pm     #9
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You can use the tables below to estimate your current marginal tax rate.
Keep in mind that the personal exemption and standard deduction will affect the income levels in the chart below. By this I mean, the amount of personal exemption plus standard deduction is not taxed. For single - $9750 is not taxed, then $9751 to $18450 is taxed at 10%. Just add $9750 to the amounts in the single bracket levels. ($5950 standard deduction plus $3800 exemption)
For Married - $19,500 is not taxed, then $19,501 to $34,800 is taxed at 10%. Add $19,500 to the married brackets below (11,900 for deduction plus $3800 each for both husband and wife).

If single at $20.000 you are taxed at 15% until your income reaches $45,100. If you have kids, itemize, contribute to IRAs etc it will affect things. This is just for simple estimates. Also, remember to add in state income tax which depending on your state should vary between 4% and 6% at your income level.


Individuals can use the tax rate schedules in a number of ways to help plan their finances. You can use these tax rates to figure out how much tax you will pay on extra income you earn. For a taxpayer in the 25% tax bracket, extra income will be taxed at that rate until the taxpayer reaches the next tax bracket.

Single Filing Status
[Tax Rate Schedule X, Internal Revenue Code section 1(c)]
10% on taxable income from $0 to $8,700, plus
15% on taxable income over $8,700 to $35,350, plus
25% on taxable income over $35,350 to $85,650, plus
28% on taxable income over $85,650 to $178,650, plus
33% on taxable income over $178,650 to $388,350, plus
35% on taxable income over $388,350.

Married Filing Jointly or Qualifying Widow(er) Filing Status
[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]
10% on taxable income from $0 to $17,400, plus
15% on taxable income over $17,400 to $70,700, plus
25% on taxable income over $70,700 to $142,700, plus
28% on taxable income over $142,700 to $217,450, plus
33% on taxable income over $217,450 to $388,350, plus
35% on taxable income over $388,350.

Personal and Dependent Exemption – increase to $3,800 per exemption
Standard Deduction for 2012
Singles – increase to $5,950
Married Filing Jointly (MFJ) – increase to $11,900

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  Old  June 23rd, 2012, 8:26pm     #10
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It always depends on your tax bracket, but just as a golden rule I save 25% of the ARV. I just take that amount and stick it in a savings account. I haven't had a refund in years due to wins (a good thing!), so that percentage has been very accurate for me as an amount to save up that I'll have to pay out for city/state/federal. Better to have more money than not enough and be caught off guard

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  Old  June 23rd, 2012, 8:47pm     #11
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exactly
My big wins have all come through at 25% but I count on 50% initially just to make sure I'm not left holding the bag.
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  Old  June 24th, 2012, 8:24am     #12
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Thanks for that chart. That's very helpful. I suspected it would be around 10-15 percent for my income but wanted to be sure before I accept something I cannot afford. That's a good idea to stick up money for your taxes throughout the year.
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  Old  June 24th, 2012, 12:05pm     #13
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Location: Saskatchewan Canada eh
luckily I'm from canada so never pay taxes on a legit win

hopefully you have a good accountant who can give you advise

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  Old  June 24th, 2012, 1:37pm     #14
n8sense is offline
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Quote:
Originally Posted by bigskwinner View Post
luckily I'm from canada so never pay taxes on a legit win

hopefully you have a good accountant who can give you advise
That's fantastic. Uncle Sam gets a cut of everything here. I wish that our government would look into a model like you guys have there. I'm afraid the US is going to hell in a handbasket fast.
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  Old  June 24th, 2012, 1:39pm     #15
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I won about 7100 last year that was taxable and had to pay about 350 in taxes for feds and got back money from state. I also make under 25000 a year

My 2012 Wins

http://forums.online-sweepstakes.com...5#post10515835
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