This entry was posted
on Thursday, March 11th, 2010 at 1:48 pm and is filed under Car Raffles.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
8 Responses to “I just won a $37000 car, what taxes can I expect to pay and how much?”
The value of the car will have to be declared in both Iowa and U.S. income taxes. The value of the car may put you into a higher tax bracket. It’s impossible to give an estimate without knowing what your income is.
You’ll pay state and federal income taxes on the value of the car. The total bite will depend upon your total income. If you’re typical, you’ll pay 25% in Federal income tax and an additional 5% in state income tax.
You’ll also pay the state use tax when (or shoudl I say if) you register it. Not sure what Iowa’s is, but here in MO it would cost you about 8%.
Most folks who have wins like this end up selling the prize in order to pay the taxes.
The taxes depend on your filing status and your other income and deductions. If you are in the 15%- 25% tax bracket, which most taxpayers are, then expect to pay an additional $6K to $9K in taxes on the federal return. Plus state and local taxes, and registrations fees.
A raffle win is considered gambling winnings. If you have gambling losses now is the time to gather up those documents. You can deduct your gambling losses up to your winnings if you itemize on Schedule A.
If you had $37K in gambling losses to offset this win, your net additional tax would be zero, although your AGI may disqualify you from some other credits.
The winning is not subject to social security and medicare taxes. It will be added in your income and will be taxed at your tax rate that apply to your income.
.
March 11th, 2010 at 2:22 pm
The value of the car will have to be declared in both Iowa and U.S. income taxes. The value of the car may put you into a higher tax bracket. It’s impossible to give an estimate without knowing what your income is.
March 11th, 2010 at 2:41 pm
Wow. Probably a lot.
Personally, I’d sell it, buy a cheaper car, and keep the change!
Congratulations!
WooHoo!
March 11th, 2010 at 2:49 pm
Dude! That is totally awesome!
Friggin gratz!!
March 11th, 2010 at 3:04 pm
You’ll pay state and federal income taxes on the value of the car. The total bite will depend upon your total income. If you’re typical, you’ll pay 25% in Federal income tax and an additional 5% in state income tax.
You’ll also pay the state use tax when (or shoudl I say if) you register it. Not sure what Iowa’s is, but here in MO it would cost you about 8%.
Most folks who have wins like this end up selling the prize in order to pay the taxes.
March 11th, 2010 at 3:22 pm
will probably cost a lot.
March 11th, 2010 at 3:32 pm
What is your marginal income tax rate? Apply that rate to the stated value of the vehicle to determine how much tax you’re expected to pay.
The value of the vehicle is treated as ordinary income to you.
March 11th, 2010 at 3:45 pm
The taxes depend on your filing status and your other income and deductions. If you are in the 15%- 25% tax bracket, which most taxpayers are, then expect to pay an additional $6K to $9K in taxes on the federal return. Plus state and local taxes, and registrations fees.
A raffle win is considered gambling winnings. If you have gambling losses now is the time to gather up those documents. You can deduct your gambling losses up to your winnings if you itemize on Schedule A.
If you had $37K in gambling losses to offset this win, your net additional tax would be zero, although your AGI may disqualify you from some other credits.
March 11th, 2010 at 4:19 pm
The winning is not subject to social security and medicare taxes. It will be added in your income and will be taxed at your tax rate that apply to your income.