St Jude Dream Home Raffle (Boise/Treasure Valley)Prev TopicNext Topic

• LuckyLilly

  

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  February 26, 2007
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  Feb 23, 2008, 6:45 pm

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  Advance tickets have gone on sale for this year's St. Jude's Dream Home Raffle.  Only 7,777 tickets will be sold for a chance at a $400,000 4br/2.5bath home in the Yellowstone subdivision in Star, ID.  There will also be 15 other prizes valued at $1,000 or more giving ticket holders a 1 in 500 chance of winning something.  Tickets will be available to the general public starting March 4.

  On the back of the flyer they sent, it says "The IRS requires that taxes on prizes valued greater than $5,000 must be paid upon acceptance and before St. Jude's may deliver the prize to the winner."  A local bank is one of the sponsors and sells tickets so they may be willing to front the winner the money, but it seems like the winner would still have to have enough income to repay the loan even if they were planning to turn around and sell the home.  Especially in this market where homes may take some time to sell.  I already have a mortgage and there's no way I'd qualify for an additional $110K loan.  

  I know for a fact other companies award prizes of greater than $5,000 without taking out taxes (on cash prizes) or requiring the taxes be paid up front (on prizes other than cash).  Does anyone know if St. Jude's actually adheres to this IRS requirement? 
• justxploring

  

  Wandering Aimlessly
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  Feb 23, 2008, 7:28 pm

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  "Does anyone know if St. Jude's actually adheres to this IRS requirement?" 

  If it is a requirement, then wouldn't you assume they'd have to adhere to it?  I know that in FL when you win the lottery, any prize of $5,000 or more is taxed 25% before it is paid.  You still need to collect $600 or more at a lottery office, but you can choose whether or not to have the taxes deducted after completing the required forms. 

  "I know for a fact other companies award prizes of greater than $5,000 without taking out taxes"

  If this is true (I have no idea, but take your word for it) then you'd be receiving a letter from the IRS in a very short time.  You can't owe too much money to the IRS.  They might overlook a few thousand if someone made more than they anticipated, since audits aren't very common, but you are supposed to file an estimated tax return whenever you win a prize that is considered as income. I'm guessing a flag will go up if someone owes $100,000. 
• LuckyLilly

  

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  Feb 23, 2008, 8:22 pm

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  If it is a requirement, then wouldn't you assume they'd have to adhere to it?

  Well that would make sense, wouldn't it?  But remember the guy who won Survivor who is now in prison for tax evasion?  CBS didn't take taxes out of his prize even tho it was a cash prize.  I can't find the articles right now, but I'm pretty sure HGTV turns their dream home over to the winner without taxes being paid.  I'm sure I read some of the people who keep the HGTV home take out a mortgage to pay the IRS and you can't take out a mortgage on a home unless it's yours, can you?

  I dunno why I'm worried about this, I think I've decided not to buy a ticket anyway.  I'd rather spend the hundred bucks on PowerBall.
• Coin Toss

  

  Zeta Reticuli Star System
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  Feb 23, 2008, 11:49 pm

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  People who have won a lot of prizes on game shows have got into serious tax binds.

  Not sure if this is true, but I read an article by a former contestant that said the IRS actually has people that watch the game shows and tracks how much people win. when it's over a certain amount, here they come... 

  Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 

  

  There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.
• justxploring

  

  Wandering Aimlessly
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  Feb 24, 2008, 1:35 am

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  Coin Toss, I can't remember when it was, but it's a vague memory that comes up when I think of game shows & contests. A long time ago there was an ad in the paper when a couple won a top prize in a McDonald's contest.  They couldn't pay the taxes. 

  The IRS tax question has come up a lot on LP, so I checked out what happens when you win money or prizes in Feb 08, for example, and then file in April 09.  I used to think you'd just invest the money and pay any additional taxes the following year, but they expect people to file estimated taxes. This applies also to people who earn a lot of interest & dividends or who earn money from self-employment. Many people file taxes quarterly. The IRS site says that the guideline is owing more than $1,000 at tax time. I'm surprised it's that low.

  Lilly, I think you raise an excellent point.  It seems as if only people with money can win prizes, huh?  I'm guessing you could win the house & get a loan for the tax by putting your house up for collateral while it's on the market, without necessarily selling it.  You'd probably still owe more than 25%.  $400,000 is in the 35% tax bracket. Also, does Idaho tax winnings? Of course, when you're dealing with that kind of money, it might be wise to ask a tax professional.