This is just part of the Federal Law on Taxes for Raffle Prizes
Federal Income Tax Withholding: Raffle Prizes
Individual raffle prizes have the potential to be $600 or greater. It is imperative that organizations holding raffles be aware of the federal income tax withholding requirements. The following was reviewed by the IRS on November 23, 2004.
If the prize amount is more than $5,000, the organization must obtain proper identification from the winner (as described above) and withhold 25% of the prize. If the organization is unable to obtain proper identification, they must withhold the higher "backup withholding.
Most states also have similiar taxes on Raffle Prizes. (when I won the car in a raffle, California tax rate was 33%)
Contest winners are subject to similiar taxes.
They all have their hand out to get their share. |