<prompt> Human: Just so I know how much to keep stashed away from the rest of my money for Uncle Sam once he comes around. The prize was just a straight forward check that was given to me from a contest, no more or less.Thanks for your help!Assistant: Itll be taxed at your current marginal rate.Human: Oh really? I heard it was taxed at a pretty heavy rate because it is prize money? Ive heard anywhere from 25 to 40?Assistant: Nope. Withheld at 25, maybe, but taxes withheld is not the same as taxes owed.Human: Pardon my ignorance, what is the difference?  <response>: Tax withholding is just the money that you give to the government that you estimate youll actually owe them when you file. Tax owed is what you actually owe, which may or may not be what you had withheld.When withholding tax owed, you get a refund. When withholding tax owed, you have to send the IRS a check. If your marginal rate is under 25 youre probably going to get some of whatever you have withheld from your prize back after you file your taxes. 