When Are Prize Winnings From Raffles, Sweepstakes And Contests Taxed?
The IRS has unusually complicated rules for the taxation of a prize, contest, raffle and sweepstakes win for non-resident gamblers in the United States. The IRS taxes prize winnings when both of the following criteria are fulfilled: • The prize winnings (or equivalent cash value) are at least $600.00 USD above the original wager; and • The prize winnings are at least 300 times the cost of the original wager. For instance, if you purchased a raffle ticket for $2.00 USD in the United States and have prize winnings of $600.00 USD, you will not have any raffle tax assessed, as the value of the initial wager ($2.00 USD), is subtracted from the value of the raffle win ($600.00 USD), resulting in a net of $598.00 USD, slightly less than the minimum threshold of $600.00 USD for taxes on prizes. Similarly, if you purchased a raffle ticket for $300.00 USD and have won a prize of $750.00 USD, you will also not have any prize tax assessed because the value of your raffle win is less than the 300:1
