we had a grand prize of a 07 HD Sporster last night at my work’s xmas party. dude in my office won it and is wondering what all he would have to pay for as far as title/transer, tax and all of that. does he even pay tax? anyone know how to figure out an estimate on what he’d end up paying if he keeps it? he has the option of keeping the bike (worth 10 grand) or the boss buys it off of him for 5 grand and uses it for employees to ride, so hes trying to decide what to do.
I can double check… but I remember at CC when you won a prize you had to pay like 30% of the prize value in taxes.
any accountants on here?
It’s only $18 for a bike plate. If he has to pay tax, it will cost $700. (7% in Allegheny) Even if he has to pay the tax, he’ll be better off doing that and then selling it on his own.
i thought you had to pay regular sales tax 7% on it, then tax/title/plates, after purchasing insurance. :dunno:
Prize tax. Didn’t think of that. I thought you meant sales.
http://www.andrewtobias.com/bkoldcolumns/990115.html
not sure about the link since its old…
I’d do a “sell to cover” on that item. Basically, sell it and pay the tax crap with the proceeds and keep the meat.
pretty sure you have to pay income tax on it, so that is probably a big chunk of it.
This came up a few weeks ago when some lady won a viper on the price is right. My mom started talking about how excited she was but she probably won’t even be able to keep it because she probably can’t afford to pay the taxes to get it.
As mentioned, I’m 99% sure he’s going to have to pay 6% (or 7% if resident of Allegheny County) to PA when the titled in his name and then have to report the $10,000 as income for 2006 on his state and federal taxes. So most likely he’d be looking at $600 to the state plus another $3000 or so in taxes. So if he sold the bike for $10000 he could end up with around $6000-$7000
Of course, if he takes the $5000 cash route, he will still have to report that as income for 2006 and pay taxes on it which would net him around $3000.
When my company awards prizes at a function like that, they generally pay it out through the regular pay checks and actually bump up the amount paid to cover taxes. Such as a $40 raffle prize showed up as like $58 added to my pay. If your company doesn’t offer that, getting the bike and then selling for near the $10,000 value would get him the most money.
You are supposed to claim the prize as income, so…whatever the 07 MSRP is, he should add to his income for the year, plus all the other BS that you always have to pay.
PA law imposes its income tax on PA residents on all gambling and lottery winnings from any source, except prizes from playing the Pennsylvania State Lottery. As a PA resident, you must include lottery winnings from other states and countries.
PA Law imposes its income tax on nonresidents on all gambling and lottery winnings from PA sources, except prizes from playing the Pennsylvania State Lottery.
Gambling and lottery winnings include cash, the value of property (automobiles, jewelry, electronic devices, appliances, clothes, etc.), the value of the use of property (trips, vacations, airline tickets, cruise, etc.), and other items of value. You may only deduct your costs of gambling, wagering, betting, and playing lotteries from your winnings. You may not deduct any expenses (programs, tip sheets, travel, meals, lodging, etc.) that you incurred to take part in gambling, wagering, betting, and lottery activities
Thieves…yes, yes they are definitely thieves.