You have just won a Car Sweepstakes, it seems to good to be true. You have been entering several Car Sweepstakes and finally you hit. Now what? “Time to pay some Taxes”?
A Car from a Car Sweepstakes is among the most popular Sweepstakes to win. What person would not love to win?
Keep in mind when you enter Car Sweepstakes is the taxes. Winnings from a Car Sweepstakes or other Sweepstakes can be considered a source of income. That is the law for US residents. For other countries different rules may apply.
You are the lucky winner of Car Sweepstakes amongst hundreds if not thousands of entries. You have a new car and your life could not be going any better. However, a new car can be a real pain if the winners don’t prepare themselves for the taxes. The amount you will owe depends on your circumstances, but you can estimate taxes around 1/3 of prize value and that is for any Car Sweepstakes. A $40,000 car for $12,000 is a great deal, but you still have to come up with the money to pay the taxes.
Once you have confirmed the win and you get the Car, you need to find a good accountant. Anytime you get a large win like a Car or cash amount you should always consult with a tax professional. A CPA or accountant can give you advice that is tailored to your specific situation, which is vital to ensuring that you are properly prepared. Do not hesitate or procrastinate, make sure you get an accountant right away.
Winning a Car Sweepstakes is not like winning a gift certificate.
Remember that your Car Sweepstakes win counts from the day you receive it, not from the date of your win notification. Especially in the case of large wins like a Car Sweepstakes or truck, it can take quite some time for your win to be verified and your prize to be delivered.
Here are your options: You can walk away from the car and wash your hands of it? Are you kidding me! Everyone is saying, “how could you walk away from it?” Again, remember you have to pay those taxes on it. So, unless you have the money for the taxes, that is an option as crazy as it may sound to some people. We know it does not seem right that when you win you have to share it, but you do unfortunately.
Find out the Fair Market Value (FMV) of any Car Sweepstakes and any sweepstakes prize. The FMV could be far lower than the Approximate Retail Value (ARV) listed by the sponsor – especially if it takes a while for you to take possession of the vehicle. Car values drop after the new car models come out each year, so that 2013 model you won might be less expensive when you take possession in 2014. The minute a car is taken off the lot the value drops immediately. Make sure that your taxes are fair and accurate by finding the lowest possible FMV.
So now you know the market value, what its worth and the taxes. You still need to come up with a good chunk of money but do not want to touch your nest egg that you have been working on for years. Again, winning a Car Sweepstakes sounds great but you have to be realistic. It is so easy to get caught up in the moment.
The other option would be to is to sell the car. Look at it this way, no matter what you can get for it, it is all free money. You will still end up with several thousand dollars. Another option is to try to get the car dealer you’re getting the car from to buy it back from you. There is a good chance you will get the best rate. Always make sure you get the market value, despite what any car salesman might try to say to you. Just be ready for it because some salesman will do whatever they can to get that extra buck. This way you end up with money in your pocket and the taxes are paid. Some word of advice would be to get the money, and then send it out for the taxes before you have time to think about it.
There are other possible options like getting a loan for the taxes. Do you really like the car or would you like the cash? As you can see there is a lot to take into consideration when entering a Car Sweepstakes . Winning a Car Sweepstakes can be a blessing but it can also be some what of a curse.