You know how to make taxes if i win cash? Earning in cash does not exempt you from making taxes, because you owe the payments every three months even if you do not work under dependency, because you must be paying it as if you had an employer who withholds money from your paychecks.
Tips on how to make taxes if I win cash
Learn how to make taxes if i win cash with these tips:
- First of all, the dates for fiscal year 2018 are as follows: April 17, June 15, September 17, and January 15, 2019
- Reserve your cash earnings between 25 and 30% for the payment of income tax and self-employment taxes if you collect your work in cash.
- If you are a professional who is self-employed and you charge your services in cash or cash, you are your employer, then make yourself the withholdings that your employer would make to reserve them and pay your taxes.
- Then when you pay the taxes you will complete Schedule C, which will help you reduce business expenses from your total income and you will obtain the taxable income.
- Make a record throughout the year of deductible expenses such as if you travel, calculate the miles you travel, travel expenses and office supplies, even if it is in your home you have expenses, then record them.
- For this reason, you should keep all expense receipts as a sample of expenses in case the IRS investigates it.
- Send payments every quarter, you can do it with discipline by reserving a% of the payments you receive in cash from your work.
- The easiest way is to separate a percentage for each cash payment you receive and set up a savings account for paying taxes.
- To estimate your earnings, you can ask each new client to fill out the W-9 form with their tax information such as the tax identification number or social security number and surely at the end of the year you will receive the 1099-MISCC forms with the information of the total you have paid to each of your clients.
- Remember that you do not need to wait until the due date of the quarterly tax payment, you can do it before or on the same date but never after because you will pay fines.
- If you win in cash, you must declare taxes whenever your state requires it and how much your earnings have been.
- The cash you have won may be due to money you won in the game and you will pay income tax on those winnings.
- In this case, since it is money you won in the game, you will prepare your statement declaring the winnings in empty income and you should even receive the 1099 form from the entity that awarded you with cash.
- For example, if you win a prize of $ 600 or more you must declare taxable winnings, but if the prize and less than $ 600 you must also declare it even if they do not send you the 1099 form, as the IRS requires you to declare profits even if the cash prize has been $ 50, because it is taxable income.
How to make taxes if I win cash and in which cases
- Keep in mind that you must pay in some cases as if your state requires payment on rent.
- In fact, some of the states in the United States do not require payment on rent when you win a game contest.
- You also have to look at the tax category after you have won the cash.
- In fact, by winning you increase your annual salary so you will be in another tax category that will be higher.
Example of how to make taxes if I win cash
- Suppose you live in New York and you win in the lottery 20 million dollars in cash, it will be 12.7% for municipal and state taxes, to federal taxes you will add 25%.
- However, you should think that there are states that do not charge you taxes if you win the lottery, such as California, where you only pay federal taxes, for which you would only pay 25% taxes.
- In the same way, you could have won a prize in a contest, no matter what the prize was, it will always have a cash value that the IRS will consider.
- You could have won a trip to any country with expenses paid, a television or a car, because if the value is $ 20,000 you will declare to the IRS $ 20,000 for payments the corresponding taxes.
- For this reason, when you win a prize that is not cash you must know what the value of that prize in money is because it will be what you are receiving and on what you will be taxed.
How much is the minimum to make taxes
The minimum to make taxes depends on your age and your marital status, for example considering the year 2017:
- If your marital and unique status and you are under 65 years of age the minimum will be $ 14,400, if your income is lower you will not file the federal tax return.
- Specifically if your status is unique and you are under 65 it is $ 10,400, but if you are 65 years of age or older it is $ 11,950.
- If you got married and file a joint return and both are under 65 years of age it is $ 20,800, but if you or your spouse are under 65 years of age and your partner is 65 or older it is $ 22050.
- If you got married and file a separate return it is 4050 regardless of age.
- If you are the head of the household and under 65 it is 13,400 dollars.
- If you are 65 years of age or older it is $ 14,950.
- If you do not reach 65 years of age and become widowed and have a dependent child, it is $ 16,750.
- With the same situation but you are 65 years or older it is 18,000 dollars.