Do you pay taxes on sweepstakes winnings? Yes, in most cases, you are required to pay taxes on sweepstakes prizes. The Internal Revenue Service considers winnings from sweepstakes as taxable income, meaning you must report any amount you win when filing your tax return. This applies to cash prizes as well as the fair market value of non-cash prizes, such as cars or vacations. It is essential to keep accurate records of your winnings and any related expenses. Understanding your tax obligations can help you avoid surprises during tax season and ensure compliance with federal and state tax laws.
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