question about winning money and taxes
 

Simple question... does anyone know how much tax is taken out of contest money winnings? $10,000 to be exact.

i think it depends on where you live. a lot of professional gamblers choose to live in nevada because there's no state income tax. i don't know if there's a certain amount that's taken out beyond normal income taxes (federal and state), but i think you still have to pay fica/social security/medicare on it. but anything more, i don't know.

For Mass I believe it is something rediculous like 40%. I know for a fact that it is 40% for signing bonuses, they classify it as unearned income and I believe that lottery winnings apply in this category as well.

So you would take home 6,000 and lose 4,000

How that is withheld is essentially not important, it is how much is due. If excess is withheld, you will get it back when you file taxes.

But to your question, it does depend on what state you live in for a "specific" rate. Generally winnings from casinos are do not have taxes withheld. Winnings from states lotteries, depending on payout, withhold at a rate between 25-31% for federal tax purposes and the appropriate state rate (most state range between 3-6%). Some states do not tax their own lottery winnings. Bottom line, you can expect somewhere around 28-35% withheld on the $10k.

i used to work for a company that gave away prizes like this. typically you will get a 1099-MISC at the end of the year and the 10K will be added to your income. You will pay taxes based on your "new" income.

or you can play the lottery in canada (no taxes on winnings as the cost of the ticket itself is considered a tax)

I'd rather win half of 50 million USD than all of 10 million CAD though. :D

Suave, I'd rather win $10k CAD than half of $10k USD, since $10k is the number in question :p

If you win in a lottery, you should get a w2-G (certain gambiling winnings) when you get a check. How much you get taxed depends on where you live. In Mass, where I am, if the winning amount exceeds 5,000, the taxes are (sometimes) automatically withheld. When you get the check, look at boxes 1 and 14 on the W2-G, that shows how much of your check was automatically givento "the man".

Here's a link to some info:

http://www.bankrate.com/brm/itax/tips/20010131a.asp

In some states (Maryland, for instance) senior citizens do not pay taxes on lottery/contest winnings. So, if your winning is a lottery ticket, and you know a trustworthy senior citizen, you can have that person cash in for you. Not sure how it works in other states, but it may be beneficial if you checked out the state policies, which are usually found in state.gov websites.

i think florida is about 30%.
depends on where u live.