Do I have to pay taxes on sweepstakes prizes? Yes, winnings from sweepstakes are considered taxable income by the IRS. This means that if you win cash or valuable prizes, you must report them on your tax return. Do I have to pay taxes on sweepstakes prizes? The amount you owe will depend on the prize's value and your overall income, so it's essential to keep accurate records and consult a tax professional to ensure compliance with tax laws.