Originally Posted By jsnelk I am wondering if you are lucky enough to win a big prize how much would you have to pay for taxes. Say you win a night in the new suite, do you pay taxes?
Originally Posted By FerretAfros I believe the "official value" of the prizes are all carefully calculated (except maybe the big trips where it's a lot more obvious) so that they are just below the value that gets taxed. I'm not sure what the magic number is, but I remember seeing the fine print that a night in Cinderella Castle was valued at about $480, when we all know it's a lot more than that (especially with the personal security guard there all night). I assume the apartment suite in DL will have similar pricing, even though it would cost a lot to rent a suite like this, even if it wasn't in a great location and filled with free stuff.
Originally Posted By Darkbeer It all depends on the person who wins, and their tax rate(s). Basically, you will need to add the fair market value of the prize to all your other income, and that includes any cash amount that is to help "offset" taxes. Then after adding it to your income, you take all your normal deductions, and then pay the tax on the amount for both your Federal Tax Return and for most folks, your state tax return. So with someone with a high income, you could be paying over 40% on the prize. On the other hand, somebody on a tax free disability retirement would pay close to nothing (and gets to keep the extra "cash" that is given in the high level prizes). Disney came up with an "average" guess to the amount of tax that would be do, IMHO, it is an underestimate, and does not include State Income Taxes. But still, something is better than nothing. By the way, ALL prizes are supposed to be reported on your income taxes (the law states if you found a Dollar Bill on the ground, you are also supposed to report that). But the law doesn't require the company issuing the prize to have to report it to the IRS unless it is $600 of value or more. And, FYI, you can dispute the amount reported. For example, if you win a car, the amount on the 1099-Misc is usually the sticker price plus any add-ons and fees paid. But if you can prove that currently the market price for that exact model is about $2,000 less (usually by gathering ads and price quotes from dealers in your area), you only have to pay taxes on the lesser amount (aka FMV).
