What Taxes Must You Pay When You Receive a Free Car As a Prize or a Gift?


Quick Answer

An individual who wins a car must pay taxes amounting to about 30 percent of the fair market value of the car, depending on the individual's financial circumstances, advises About.com. Prize recipients must pay state taxes in the states where they won the cars, according to AccountingWeb.

Continue Reading
Related Videos

Full Answer

In some states, such as California, prize recipients must pay taxes before taking possession of the prize and then must report the prize as income in their home states, explains AccountingWeb. As of 2016, winners may wait to pay federal taxes when filing their federal tax returns, providing them time to plan and consult with tax professionals, notes About.com.

Learn more about Taxes

Related Questions