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If I win a car in a raffle then I have to pay taxes on it. What if, however, the raffle prize includes $20,000 along with the car (MSRP ~$105,000)? What's the story then? Will the cash cover the taxes? Are there other taxes/fees I'm not considering?

closed as unclear what you're asking by Joe, Nathan L, Victor, Dheer, JoeTaxpayer Sep 12 '15 at 5:19

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    The money gets taxed too... if you're lucky the money will pay for the car's taxes. But either way you're paying the taxes out of the total prize money (or your pocket). – insidesin Aug 11 '15 at 16:04
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    If you are a US resident, the state will also matter. – Nathan L Aug 11 '15 at 16:11
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    All questions using the taxes tag need a country tag too ... – dg99 Aug 11 '15 at 16:12
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For simplicity, let's say you're taxed 10% on the car and any other winnings. If the car is valued at $100,000, then you need to pay $10,000 out of pocket. If they give you $10,000, then you are taxed on a total of $110,000 and will pay $11,000 in taxes (or $1k out of pocket since they gave you $10k in cash).

To break even and pay nothing out of pocket in taxes, in this example you would want to win a $100,000 car and also $11,111.11 in bonus cash. At 10%, the taxes conveniently come out to $11,111.11.

  • Good simple example, but we really need the country tag. – JoeTaxpayer Aug 11 '15 at 16:28

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