How much taxes do they take out of a sweepstakes winning?

How much taxes do they take out of a sweepstakes winning?

Postby scannalan » Sat Jan 15, 2011 10:03 am

I won $25,000 in a sweepstakes and I live in North Carolina. This was NOT a gambling contest, it was free to enter. I'm wondering how much taxes they will take out of this.
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How much taxes do they take out of a sweepstakes winning?

Postby elwold » Sat Jan 15, 2011 10:07 am

if you have already received the check didn't they withhold the taxes before they sent you the check?
if not, then however much this winning increases your overall total gross is what you will pay income tax on
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How much taxes do they take out of a sweepstakes winning?

Postby joe » Sat Jan 15, 2011 10:16 am

Normally the withholding is 25% for federal plus whatever your state requires. You'll receive either a Form W2-G or 1099-MISC that will show the amount of the prize and whatever tax was withheld.

The value of the prize goes on line 21 as other income and any withholding is added to your W-2 withholdings. The tax will depend upon your total earnings for the year.
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How much taxes do they take out of a sweepstakes winning?

Postby radbyrne » Sat Jan 15, 2011 10:19 am

It's 25% of the prize if you provide proper ID etc. It's 28% if you don't. That's just withholding, not your actual tax liability. Doesn't have to be gambling. TV shows have to withhold on prizes.

Las Vegas CPA
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