Say you win a plane..

[us AAirways]

A car, boat, etc. Do you have to pay the taxes right away, or not until Apr 15th the next year?

I didn't win anything, just something I have always wondered.

 

[wanttaja]

A car, boat, etc. Do you have to pay the taxes right away, or not until Apr 15th the next year?

I didn't win anything, just something I have always wondered.

I believe the IRS will demand an advance payment, like any other winnings.

Remember, if you owe too much at April 15th (no matter what the reason) you may have to pay a penalty.

Ron Wanttaja

 

[Norman]

Sales tax? I believe the state will want your money up front when you register it.

 

[RalphInCA]

Don't worry about it AAir, I am pretty sure I will be winning the AOPA Debonair. ;-)

 

[Ted]

The rule is you get to complain about how much the free plane cost on the internet.

 

[JB1842]

I paid the state right away when I registered the plane. I just put it on my fed tax forms come tax time.

 

[201Driver]

I believe the IRS will demand an advance payment, like any other winnings.

Remember, if you owe too much at April 15th (no matter what the reason) you may have to pay a penalty.

Ron Wanttaja

As a semi-retired CPA, IRC, one of the exceptions to the penalty is if one's estimated or withhold taxes for the current year equals or exceeds one's prior year taxes, the penalty is waived.
In practicality, if I win a new 2014 Mooney Acclaim 242, I would be happy to borrow to pay the taxes. Of course, I'm dreaming!

 

[Katamarino]

In the Netherlands, where I lived before the USA, the state would pay you interest on your tax refund (if you got a refund) to take account of the time they'd been holding that money away from you.

Guess that doesn't happen here...?

 

[Greg Bockelman]

In the Netherlands, where I lived before the USA, the state would pay you interest on your tax refund (if you got a refund) to take account of the time they'd been holding that money away from you.

Guess that doesn't happen here...?

Absolutely not. Your tax refund is in reality an interest free loan to Uncle Sam.

 

[frfly172]

You pay on winning.the govt wants their money up front. No lack of trust there.

 

[paflyer]

Absolutely not. Your tax refund is in reality an interest free loan to Uncle Sam.

Which is why, if you expect a refund every year (sadly, only a distant memory), you should raise the number of exemptions on your W-4.

 

[Dave Theisen]

I can't figure out how they justify counting last years tax refund as taxable income for this year. Didn't I already get taxed on that money?


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[Hank S]

I can't figure out how they justify counting last years tax refund as taxable income for this year. Didn't I already get taxed on that money?


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because one deductible expense on Schedule A is the taxes you paid. If you get a refund, your deduction was too large.

 

[201Driver]

I can't figure out how they justify counting last years tax refund as taxable income for this year. Didn't I already get taxed on that money?


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Thank goodness we don't have that problem here in Florida since we have no state income taxes.

 

[SkyHog]

I can't figure out how they justify counting last years tax refund as taxable income for this year. Didn't I already get taxed on that money?


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Because having the money withheld reduced your taxable income, and therefore you "owe" backtaxes in the winfall.

It keeps you from hiding money from the feds by over withholding state taxes.

 

[201Driver]

A car, boat, etc. Do you have to pay the taxes right away, or not until Apr 15th the next year?

I didn't win anything, just something I have always wondered.

You will have to pay on April 15th since there is no cash to withhold when you win the airplane. You will be given a form W2-G for the fair market value of the plane which you'll need to include in income when you file your taxes.

 

[48dodge]

Because it's all theirs. Just be happy they allow you to keep some each year.

 

[Matthew]

In the Netherlands, where I lived before the USA, the state would pay you interest on your tax refund (if you got a refund) to take account of the time they'd been holding that money away from you.

Guess that doesn't happen here...?

Excuse me for one second:



Ok, carry on.