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kermsa
Returning Member

Sweepstakes Win

I won a sweepstakes cash prize of over $75,000.  Where do I report this amount on my return? On past returns I have listed the win on "Schedule 1 - Additional Income and Adjustments to Income" under "other income" and put the total on 1040 as "other income". I am also employed full-time.  I understand this will put me in a new tax bracket.  The IRS site states that - "You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000. Withhold 24% of the proceeds (the winnings minus the wager). This is regular gambling withholding."  This was not a win from gambling, no wager or payment was made.   I will be issued a 1099-MISC for the prize money.

3 Replies
rjs
Level 15
Level 15

Sweepstakes Win

You report it the same way that you did in previous years. Is there some reason that you think it would be different this year?


The fact that no tax was withheld from your prize means that you will have a big tax bill, and a penalty for not having made an estimated tax payment to cover the tax on the prize, unless you had enough tax withheld from your pay to cover it.


When you enter the Form 1099-MISC in TurboTax, the software will put it in the right place on your tax return. The wording of your question sounds like you are not using TurboTax. This community is run by Intuit, the company that makes TurboTax, to help its customers use TurboTax to prepare their tax returns.

 

kermsa
Returning Member

Sweepstakes Win

Thank you for responding.   The question (confusion!) entered my mind because of the size of the prize being higher than what I had won in the past and me thinking it somehow put the income in a different category based on what I read at the IRS site.  I ended up here because I have used TurboTax for a few years now and I am working out the estimated taxes at this time.  Thank you again!

Opus 17
Level 15

Sweepstakes Win


@kermsa wrote:

Thank you for responding.   The question (confusion!) entered my mind because of the size of the prize being higher than what I had won in the past and me thinking it somehow put the income in a different category based on what I read at the IRS site.  I ended up here because I have used TurboTax for a few years now and I am working out the estimated taxes at this time.  Thank you again!


Gambling and contest prizes are still just "other income."  There aren't any special rules. 

 

Assuming you get a 1099-MISC with the prize in 3, then Turbotax has a section in the interview just for that.  There may also be a list of special circumstance and a box you can check that says something like "contest prize".  You may be asked some test questions related to working and self-employment, be sure to answer "no" -- this is not a business, you did not intend to earn a profit, this is not similar work to your regular job.

 

It's a good thing you mentioned estimated taxes.  You may not need to pay the full amount of the taxes, but you at least need to make sure that your payments into the system (from withholding plus estimated payments) is at least 110% of last year's tax liability.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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