1099 - Misc. (Sweepstakes Win Question)

[inspiringmind]

What is the name of your state? Wyoming

Kind of a two-fold question.

1.) I won a sweepstakes and the fair market value is $3,191. I am trying to find out how much tax I will have to pay on this. Here is the tax deal: Our only income is SSDI which is not taxable cause we don't have any other taxable income above $32,000. Our deductible when we do file for taxes will be $10,000. Does the taxes I pay go by my income (Which is all untaxable) or just by the state I live in? Will I pay state taxes on the win?

2.) Someone said I would have to pay self-employment taxes on the win. I find that very hard to believe since being self-employed is described as (by the IRS):

*You carry on a trade or business as a sole proprietor or an independent contractor.
*You are a member of a partnership that carries on a trade or business.
*You are otherwise in business for yourself.

I do not pay myself to enter sweepstakes. I do not pay anyone else to enter sweepstakes for me. I spend more money entering sweepstakes and winning them because of the taxes I might have to pay.

Thanks for any insite you can give.

 

[LdiJ]

What is the name of your state? Wyoming

Kind of a two-fold question.

1.) I won a sweepstakes and the fair market value is $3,191. I am trying to find out how much tax I will have to pay on this. Here is the tax deal: Our only income is SSDI which is not taxable cause we don't have any other taxable income above $32,000. Our deductible when we do file for taxes will be $10,000. Does the taxes I pay go by my income (Which is all untaxable) or just by the state I live in? Will I pay state taxes on the win?

2.) Someone said I would have to pay self-employment taxes on the win. I find that very hard to believe since being self-employed is described as (by the IRS):

*You carry on a trade or business as a sole proprietor or an independent contractor.
*You are a member of a partnership that carries on a trade or business.
*You are otherwise in business for yourself.

I do not pay myself to enter sweepstakes. I do not pay anyone else to enter sweepstakes for me. I spend more money entering sweepstakes and winning them because of the taxes I might have to pay.

Thanks for any insite you can give.

No, you do not have to pay self employment taxes on the win. It is not self employment income, it is "other income". However, you will need to file a tax return for the year in question. If your only other income is SSDI, then it won't result in any taxes due, because your standard deduction and personal exemptions will more than wipe it out......at least on a federal level. There may be some tax due on the state level.

 

[inspiringmind]

I just figured out that my state is one of seven states that does not have income tax!! Yeah!! Thsi means I won't have any taxes on the win!