No matter your luck or skill at gambling, winning a car at casino is always exciting and can make life-long memories! But before making that grand prize announcement, consider taxes and related matters which could increase the cost of it further. In this article we discuss what steps to take if this occurs to you and how you can avoid paying too much in taxes.
Can I Take Cash Instead?
Many people discover that winning a car at casino is not as straightforward as they anticipated. Although jackpot winners do have the chance at landing one, most cars are won through promotions and contests hosted by online casinos for VIP players, where prizes such as VIP treatment, free play credits, or exclusive bonuses may be given out regularly.
To win a car at a casino, you will require proper identification and documentation, including your driver’s license and proof of insurance policy. Furthermore, you will have to complete a claim form which will ask for personal data as well as make and model of vehicle you won. Once complete, ownership of the vehicle will transfer over from casino ownership back into your hands.
The IRS tax rules on cars vary based on your tax bracket. On average, you’ll pay around 30% of its value as federal taxes (state income taxes may also apply), though state income taxes may also apply. Furthermore, when calculating taxes for your car’s use in business purposes you can sometimes deduct associated expenses from your taxes altogether.
If your intention is to use the car solely for personal purposes, it would be prudent not to take it on vacation with you. Doing so would negate any tax deductions you might qualify for as well as decrease your chance of securing a low APR loan. Furthermore, be wary if financing through credit card as this could adversely impact your credit score as well as any associated sales taxes and fees that accompany its purchase.
Avoid paying taxes by buying your car with cash instead of using credit to buy it. Not only will this save money on its price tag and build credit, but if this option is unavailable to you it is better to obtain financing through either leases or traditional bank loans as these transactions will report directly to credit bureaus and lower your score.
