You won — now what?

The part nobody mentions when they tell you about the prize.

First — congratulations. Genuinely. But before you get too far ahead, there's a practical side to winning that catches a lot of people off guard: prizes are taxable income in the US, whether it's cash, a car, or a trip.

The basics

If you win $600 or more from a single sweepstakes, the organizer is generally required to send you (and the IRS) a Form 1099-MISC reporting the value of the prize as "Other Income." Win a car worth $35,000? That's reported at its fair market value, not what it cost the organizer.

Even prizes under $600 are technically taxable — you just won't get a 1099 for them. The IRS still expects it reported as income.

Non-cash prizes are the tricky part

A cash prize is simple: you get money, some of it goes to taxes. A car, vacation, or gadget bundle is trickier — you owe tax on the value, but you didn't receive any cash to pay that tax with. Some winners of big non-cash prizes end up needing to pay several thousand dollars out of pocket before the tax bill catches up with them.

What to actually do

Keep every official notification and any 1099 you receive. Set aside roughly 25–35% of a cash prize's value if you're not sure what bracket you'll land in. For anything sizable — especially non-cash prizes — it's worth having an actual tax professional look at it rather than guessing, since state taxes and your existing income both affect the real number.

We're not tax advisors, and this isn't tax advice — just the practical heads-up we wish someone had given us. For anything beyond a small prize, a real tax preparer is worth the cost. We use H&R Block for this ourselves — full disclosure, that's an affiliate link.