| Ask The Expert
If I were to win a house,
property and other stuff that was worth a little over a million
dollars, how would I know how much I would have to pay in taxes
and would I have to pay any other money? Also, would I have to pay
the taxes all at once or would I be able to make payments? Finally,
could I take a loan against the house I just won in order to pay
the taxes? Thank you, Barbie
Great question!
If you win the property (I hope you do!), you will receive a 1099
to file with your taxes. How much you would have to pay is something
you will want to have your tax advisor help you with. If the sweepstakes
is legitimate, you should not have to pay any other money besides
the taxes. No, you would not have to pay the taxes all at once,
you would be allowed to make payments. I found some information
from the IRS's website that may help you: http://www.irs.gov/faqs/page/0,,id%3D15905,00.html.
According to their website,
If you cannot pay the full amount due as shown on your return,
you may ask to make monthly installment payments. However, you
will be charged a one time user fee of $43.00, and you may be
charged a late payment penalty unless you can show reasonable
cause for not paying the tax by April 15, even if your request
to pay in installments is granted. Before requesting an installment
agreement, you should consider less costly alternatives such as
a bank loan.
As far as taking a loan against the property, yes,
as long as you have the deed to the house and property, you should
be able to take a loan against. Another alternative would be to
sell the property.
Since we are getting close to tax time, I will re-post a related
question posed to me in the October issue:
Do I have
to claim my prize winnings on my tax return?
Yes, you do.
As of 2001, gambling winnings must be reported on IRS Form W-2G
if an individual receives the following:
Winnings from gambling, lotteries, raffles, sweepstakes, wagering
pools or drawings having a value of $600 or more. Prizes and gambling
winnings having a value in excess of $5,000 are subject to withholding
at the rate of 27%.
Click
here to download IRS Form W-2G.
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