Knowing How To Pay Your Sweepstakes Taxes

Congratulations, you’ve won the sweepstakes. Please be sure to pay your taxes on your winning’s as shown on line 12 of the form enclosed. Have you ever received a notification like this? I hope not, it could be fraudulent. Many scams are out there and take advantage of people that don’t know when or how to pay taxes upon a sweepstakes winning. Here is what you need to know. Paying Taxes; How to? If you’re the lucky winner of a sweepstakes, you may be notified but never receive your winnings. A letter is sent out demanding tax payments prior to your being sent your winnings. Never pay this tax. You pay the IRS not the sweepstakes itself. Read more on how to pay your sweepstakes taxes.

1099 Form

In order to pay the IRS you’ll need a 1099 form attached to your annual taxes. You’ll put in the value of your winnings (if it is a dollar amount it’s fairly easy but if it’s a gift you’ll need to find out the fair market value-FMV of the item). You will then send this form in with your taxes. All of the instructions are in the tax booklet.

Be Aware

It’s important to be aware that your winnings, depending upon what they are, may place you in a higher tax bracket. Make sure to get a Fair Market Value or FMV on your gift item and keep a copy of how you got said value (online, in person, through a pawn shop etc.).

Remember

Keep a copy of all of your winnings each year. Itemize your tax return if you have more than one winning item. Consider having a professional prepare your taxes if they seem overwhelming. Have a professional double check your return to ensure that everything is completed accurately on your forms. Always pay any taxes that are due.

Paying your sweepstakes taxes isn’t difficult if you follow these tips.