Ok,stupid question here.

[MrsK2002]

I would like to know,and if this topic doesn't belong here,by all means go ahead and put it in the right section.
My stupid question for the day is: if you win a contest,and the prize ranges from $500 to $1000,would the IRS consider it taxable?The reason why i am asking,and i genuinely do not know...i enter the contests and there are some great ones offered,but i enter the ones sometimes that do not go above and beyond $500.Does this make sense?
I'm just curious.Thank you.Any and all help would be appreciated.

 

[PugGirl]

Maybe this will help?

. What percentage in taxes will the Lottery withhold from my prize?
A. The Internal Revenue Service requires the Florida Lottery to withhold 25 percent federal withholding tax from prizes greater than $5,000 if the winner is a citizen or resident alien of the U.S. with a Social Security card. The Florida Lottery is not required to withhold federal withholding taxes from prizes for $5000 or less. If the prizewinner is a U.S. citizen or resident alien who does not have a Social Security number, the Florida Lottery is required to withhold 28 percent backup federal withholding tax from any prize more than $600. For nonresident aliens, the Florida Lottery is required to withhold 30 percent federal withholding tax from all prize amounts. The Internal Revenue Service requires the Florida Lottery to report all winnings for $600 and above for U.S. citizens and resident aliens.

 

[monkfish]

I would like to know,and if this topic doesn't belong here,by all means go ahead and put it in the right section.
My stupid question for the day is: if you win a contest,and the prize ranges from $500 to $1000,would the IRS consider it taxable?The reason why i am asking,and i genuinely do not know...i enter the contests and there are some great ones offered,but i enter the ones sometimes that do not go above and beyond $500.Does this make sense?
I'm just curious.Thank you.Any and all help would be appreciated.

First, it's not such a stupid question.

But the answer is pretty simple -- if you win a prize larger than 49 cents then it is taxable. In the 2007 forms, it was to be reported on line 21 of the 1040. Refer to IRS publication 525 for details.

To avoid a large contest because of fear of tax is neither mathematically nor financially sound reasoning. Pretend you win $500. Also pretend you are in the top tax bracket and are taxed at 28%. That means you still have $360 that you wouldn't have otherwise.

 

[MrsK2002]

Thank you Pug Girl and monkfish.You both helped answer my question.You two are just awesome!!!!:claps:

 

[diGriz]

However...

You don't pay any taxes on Nigerian or United Kingdom lotteries

 

[MrsK2002]

Thank goodness for that diGriz....:rofl::rofl::34: