I won a prize! Now, how much will I pay in taxes?

March 7, 2014 7:17 AM

I won a prize in an online drawing from a small business. (The prize is something I want, and I don't want to sell it or give it away.) The stated value of the prize is $750 (and I've confirmed that is what it would actually cost if I were paying for it—the price is not inflated for the prize). How can I determine what taxes I will need to pay on this, given that I pay taxes in NYC, New York State, and federally?
posted by ocherdraco to Work & Money (3 answers total)

They should send you a 1099 or some such and then you can go ahead and include it as income when you report your taxes next year.

This is what I did when I won money on a game show.
posted by Ruthless Bunny at 7:26 AM on March 7, 2014

Federally, you're just going to report the value as income on your tax return, same as your wages or whatever. You'll pay the same rate as you do on the rest of your earned income. See Reporting Miscellaneous Income from the IRS. The business might send you a 1099-MISC.

I don't know about NYC and NY but in states where I've reported this type of income it wasn't treated any different from the rest of my earned income.
posted by mskyle at 7:32 AM on March 7, 2014

Thanks!
posted by ocherdraco at 7:48 AM on March 7, 2014