So my wife recently won a camper, scooter, and cash from the local casino. The total prizes was about $24k. Is the rule of thumb still that Federal taxes on it will be 24% ($5760). Can I submit this amount to the IRS now or should I wait until tax season? Does anyone know how the state of Wisconsin handles this? Is it a flat rate?
Thank you for any advice you can give.
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The reason we pay income taxes before filing our tax return is to avoid paying underpayment penalties. There are two ways to avoid them and they are spelled out on this IRS website linked below. The safest way for you is probably paying in an amount equal to 100% of your 2022 total income tax (110% if your 2022 Adjusted Gross Income was over $150,000). If you need to pay them now, I recommend you go to irs.gov and click on Make a Payment, select Pay Now with Direct Pay. Use Estimated Tax as the reason. Alternatively, you can download a copy of IRS 1040ES voucher and mail it in with a check. Direct Pay is, IMO, much safer. Pay no later than June 15th.
I would suspect WI has a similar rule as the IRS. No, you will pay WI at the highest tax bracket, not a flat 4%, based on your total income and marital status. See https://www.tax-brackets.org/wisconsintaxtable
https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty
To avoid a penalty, pay your correct estimated taxes on time. Find how to figure and pay estimated taxes.
You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:
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