It's that time again...McDonalds Monopoly is back. Imagine getting the winning piece on McDonald's large fries. You already have Park Place and you just peeled off Boardwalk- you have just won 1 million dollars! Before you quit your day job and go max out your credit cards, you should be planning out how you are going to satisfy Uncle Sam. You know he is going want a piece of that pie!
The McDonalds Monopoly grand prize of $1 million is paid out in annuities. The winner gets $50,000 a year for 20 years with no interest. A good portion of that should go over to Uncle Sam. In fact, winnings such as this would be taxed at about 25% at the Federal level, and if you live in Oklahoma, the rate is 4%. Therefore, you are looking at about 29% taxes! This leaves a person roughly $35,500 a year for 20 years.
What if you collect all green pieces and win the Nissan instead? I hate to break the bad news, but it's not a free car...it comes with a price. You still have to report that on your tax return and the car will be taxed at the fair market value. Many people get into tax problems after winning a car, a vacation, or other non-cash prizes as they cannot pay over the tax on their winnings from their winnings.
The best thing to do after winning a prize at McDonalds Monopoly is to immediately consult your tax professional. They can advise you how to proceed so that Uncle Sam will not be knocking at your door.