Do I have to pay taxes on a home entertainment center I won?

December 8, 2003

From:  Troy
Date:  Sun, 23 Nov 2003

I just won a home entertainment center worth about $10,000, and I would like to know what I will have to pay for taxes on it. I live in Michigan.

Everyone is telling me I will have to pay 30%. Please tell me that isn't right.

Best regards,
Troy

Answer

Date:  Mon, 01 Dec 2003

Hello Troy,

I'm sorry, but prizes and awards are taxable. The rate that applies depends on how much other taxable income you have. Why don't you visit a tax advisor, have a projection done, and ask for suggestions about what you might do before the end of the year to reduce your tax bill.

Good luck!
Mike Gray

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