The feeling of winning a sweepstakes prize is no doubt unimaginable and well, this isn’t something everyone gets to experience. But on the other hand, the biggest turn off of winning sweepstakes prizes are the taxes that you have to pay on them. Yes, you read it right! If you are someone who is lucky enough to win a sweepstakes prize in the United States then get ready to face some real time taxes on your sweepstakes. You will have to claim your sweepstakes prize on your 1040 form for the current tax year filing. Not only this, in fact, you will have to declare all of those sweepstake prizes too that are non-monetary and you will have to mention them as “Other income”. Isn’t it a total disaster of your happiness of winning a prize? Well, it definitely is but don’t worry because you do have a way out.
There is this website out there https://keepthesweep.com/ that helps people with some alternatives to taxes when they win prizes. Yes, such websites do exist and if you really want to save some money and if you don’t want to get caught in the trap of taxes then you need to head to the website right now and see what they have to offer to you.
Table of Contents
Estimating Taxes And How The Rule Works?
Using the rule of thumb, you can easily figure out the amount of tax you will have to pay on a prize. Let’s take it this way, suppose you win a prize worth $9000, now the tax you will have to pay on it is going to be somewhat around $3000 which makes almost a third of the prize. However, this is just an estimate we calculated. The truth is that there are several different factors that affect the amount of money you have to pay on your different prize winnings. Just make sure to be careful while paying your taxes because people usually end up paying the taxes to the sweepstakes scams. Know that you only have to pay the tax directly to the IRS and if some sweepstakes sponsors ask you to pay the tax before getting the prize then don’t fall victim to their trap and don’t pay them any money.
Sweepstakes Expenses Deductible?
If you want to itemize your taxes then yes, there are chances that you can deduct some of the expenses out of the taxes. For example, if you have been spending money on sweepstakes newsletters, postcards, and postage etc then you can definitely deduct this money out of the tax money you have to pay. However, it all depends on the US tax law. As far as the US tax law is concerned right now, well, you are allowed to cut the expenses you spend on a hobby of yours which means that yes, you can cut the money from the total amount of payable tax once you itemize your taxes and figure out the cost you spent on your hobbies.
Paying taxes on winning sweepstakes is not an enjoyable feeling but what can one do about it? It’s just a must! However, when it comes to your sweepstakes prizes then yes, you can opt for tax alternatives and save yourself from financial disaster. For this, you again need to head to the website we just referred you to at the beginning of the article. So, now without wasting any more time just head to the website and try your luck on, maybe you will end up safe from the taxes that are a compulsion for you.