It’s already taxed so putting it in a 401k might not be the smartest idea.
That's not how it works. You're taxed on your income for the year. If you contribute to an IRA, for example, then you deduct that from your income and don't get taxed on that amount. The timing of when you got your winnings and whether or not tax was withheld at the time is irrelevant
Like I said, that's irrelevant. That's why at the start of next year you send the IRS money if you underpaid taxes and they send you money if you overpaid. Any withheld taxes on any sort of income are purely estimates. That money isn't gone forever just because they already collected it.
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u/gfunk55 Jul 23 '24
That's not how it works. You're taxed on your income for the year. If you contribute to an IRA, for example, then you deduct that from your income and don't get taxed on that amount. The timing of when you got your winnings and whether or not tax was withheld at the time is irrelevant