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state taxes on winnings Q

Topic closed. 21 replies. Last post 6 years ago by Littleoldlady.

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GamerMom's avatar - tails

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Posted: April 21, 2008, 10:30 pm - IP Logged

If you live in a state with a state tax and win the lottery in a state that does not have a state tax do you pay taxes to the state in which you reside on your lottery winnings?

    DC81's avatar - batman39
    MI
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    Posted: April 21, 2008, 10:55 pm - IP Logged

    Yes and if you bought a ticket in a different state from your own and they both had taxes, you'd have to pay both.

    You can't predict random.

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      NY
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      Posted: April 22, 2008, 12:45 am - IP Logged

      There may be exceptions, but what usually happens is any tax paid to a state in which you don't reside is credited towards any tax you would owe in your own state.

      As an example, if you live in a state with a 6% tax and win $1 million in a state with a 5% tax you would pay $50,000 to the state in which you won. Your taxable income in your state of residence would be increased by $1 million, which would  normally result in owing $60,000. Since you paid $50,000 to the other state you would only owe the remaining $10,000 to your state. If the tax paid to another state is more than what your state would normally collect you wouldn't owe anything extra to your state.

      As long as nothing else makes it more expensive (having to travel, for example), if you have the choice of buying the same game in a state with a tax rate that's lower than your state's or a state where the tax rate is higher the sensible choice is to play in the state with the lower tax rate. Other than that play what you want, and if you win you can let your accountant figure out who you owe and how much.

        Pinkpansies's avatar - Lottery-050.jpg

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        Posted: April 22, 2008, 3:33 pm - IP Logged

        You have to pay taxes in the state where the money was earned.  Let's say you live in Florida (which has no state income tax) and bought a lottery ticket and won in a state that has an income tax, then you will have to pay income tax for that state.  There've been people that try to duck out of paying the income tax and the courts have ruled in the states favor where the ticket was bought.

          GamerMom's avatar - tails

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          Posted: April 22, 2008, 3:35 pm - IP Logged

          Thanks.  I live in Alabama, which has a state tax, and buy tix in Florida, which has no state tax.  I know i'll probably never hit the big JP but if I ever got 5 out of 6 I would like to know about my tax situation.  thanks!


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            Posted: April 22, 2008, 7:22 pm - IP Logged

            You have to pay taxes in the state where the money was earned.  Let's say you live in Florida (which has no state income tax) and bought a lottery ticket and won in a state that has an income tax, then you will have to pay income tax for that state.  There've been people that try to duck out of paying the income tax and the courts have ruled in the states favor where the ticket was bought.

            Why not just move to the state with the lesser tax, BEFORE, you claim the prize.  Get a new apartment, drivers license, register your car, and become a resident of that state?  If you currently live in NJ, bought a Powerball in PA today, win the jackpot tomorrow, and move to PA the same day (night).  Do the paper work, then claim the prize. Seems to me, they would have to prove you were attempting to cheat the NJ tax man.  After all, nothing prevents you from moving from state to state.  You frequently hear about people not knowing they won for weeks, what prevents you from being stupid?  I could be real dumb for one hundred million dollars!  This would be especially applicable with a scratch-off; win-for-life or $1M, tickets; or even the on-line gambling sites.

              Coin Toss's avatar - shape barbed.jpg
              Zeta Reticuli Star System
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              Posted: April 22, 2008, 7:33 pm - IP Logged

              Why not just move to the state with the lesser tax, BEFORE, you claim the prize.  Get a new apartment, drivers license, register your car, and become a resident of that state?  If you currently live in NJ, bought a Powerball in PA today, win the jackpot tomorrow, and move to PA the same day (night).  Do the paper work, then claim the prize. Seems to me, they would have to prove you were attempting to cheat the NJ tax man.  After all, nothing prevents you from moving from state to state.  You frequently hear about people not knowing they won for weeks, what prevents you from being stupid?  I could be real dumb for one hundred million dollars!  This would be especially applicable with a scratch-off; win-for-life or $1M, tickets; or even the on-line gambling sites.

              Nice try.

              The taxes are going to be based on your home of residence the day of the ticket purchase.

              The tax people have people dedicated to spotting moves like the one you're suggesting.

              "I could be real dumb for one hundred million dollars! "

              Yeah, you could. Nothing like hitting a jackpot and doing 15 to 20 for tax evasion, or spending a portion of it on legal fees.

              I'm seriously starting to wonder about the Philadelphi lawyers on this board.

              Dang.

              Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

              Lep

              There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                time*treat's avatar - radar

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                Posted: April 22, 2008, 8:46 pm - IP Logged

                Additionally, in some states, you have to live there for a month or two before you can claim residency.

                In neo-conned Amerika, bank robs you.
                Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

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                  NY
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                  Posted: April 23, 2008, 2:33 am - IP Logged

                  "The taxes are going to be based on your home of residence the day of the ticket purchase."

                  In theory it will be based on your residence at the time the ticket becomes a winner. You have absolutely zero ability to collect the prize until the drawing turns your $1 piece of paper into a winning ticket, so it's not taxable income until the drawing is held. As a practical matter it may be based on which state's driver's license you have on the day of the drawing. You could move out of your old house at 9PM, and be sleeping in your new state when the drawing happens, but the state you used to live in will want proof that you moved or the tax. Buying a house or even renting an apartment will help, but if you haven't changed your driver's license they'll argue that you haven't moved yet.

                  For a scratcher it's already a winner (or a loser) the moment you buy it. In that case your residence at the time you buy the ticket will be what matters. It's a safe bet that the state will know when the ticket was sold.

                  "in some states, you have to live there for a month or two before you can claim residency."

                  Some states may want you to live there for a while before they'll offer you any benefits that residents are entitled to, but for tax purposes you're a resident as soon as you move. You don' think they're going to let you pay taxes as a non-resident on income you earn during the first month ot two in the state, do you?

                    Coin Toss's avatar - shape barbed.jpg
                    Zeta Reticuli Star System
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                    Posted: April 23, 2008, 9:16 am - IP Logged

                    KYFloyd

                    In some states (those that don't allow one to remain anonymous) the back of the ticket contains a consent to a press release.

                    This consent is made when the person purchases the ticket.

                    They have to sign it to collect a winner, but the purchase date on front of the ticket is the date the pres release was "agreed".

                    Look at the back of one of your tickets and see if there's anywhere to write the date along with your signature. There's no date on the signature block, it's on the front.

                    I'm looking at the back of a Mega Millions ticjet right now, and this is the signature block:

                    Name

                    Address

                    City    State    Zip   Phone

                    Signature

                    The only dates on the ticket are on the front, the purchase date and date or dates (if multi-draw) of the drawing.

                    I seriously doubt any state would let someone slide with the taxes on $100,000,000 or so based on a move that is an obvious tax dodge.

                    Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                    Lep

                    There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.


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                      Posted: April 23, 2008, 8:14 pm - IP Logged

                      Hummmmm ... something doesn't add up.  I have bought scratch offs from over the counter, from numerous states, and they did not scan the ticket. They just grab the quantity I bought, collected the money, and I walked away.  No record of what I bought or when I bought it. This applied in new Jersey, Texas, Oklahoma, New York, and Pennsylvania.   Therefore, for the purpose of scratch-offs, my position is valid.  The state have no idea of who bought what or when they were bought; only where it was bought.  Once again, the only revelant date reference is the expiration of the card. I could cash it in 30 days. I could cash it in 60 days. I could cash it 120 days.  No one would know.

                      For the purpose of residency, all I need is a lease agreement.  There are hundreds of those forms on the internet, or one could create one in ten minutes of semi-creative thinking.  Who would I have a lease with?  My brother could lease me a spare room for one day or one year, or ten years. It doesn't matter.  It happens all over the country.  I know, for a fact, my dad, had a lease with his borther, renting him the upstairs of a duplex.  The date of that lease if the legal date of residency.  There is no law requiring a drivers license, if you don't drive.  A state ID is a convenience, not a requirement.  Not in Oklahoma any way.  Therefore, with a back-dated lease, from my brother, I could be a resident of Oklahoma six weeks ago.  I currently have tickets from Oklahoma for Powerball.  Guaranteed, if I hit their $125M jackpot tonight, then the test will begin.

                      After all, tax evaders rarely go directly to jail.  With a few hundred million, I could afford to plea-bargain.  That sort of activity, especially from the rich and famous, or just plain rich, is done every day. They are caught with illegal guns and walk away.  They are caught drunk and walk away. They are caught completely stoned and walk away. They are caught evading taxes and walk away. Happens every day.  It is the luck of being able to afford good lawyers instead of fast-Freddie on the corner lot.  The most I would have to pay is the taxes and a penalty.  Instead of immediately loosing four or five million to a state, I'd take the chance.  I could save, say, six million, or pay six million, plus another million in penalties.  Those are execellent odds.

                        tntea's avatar - Lottery-059.jpg

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                        Posted: April 23, 2008, 11:14 pm - IP Logged

                        Hummmmm ... something doesn't add up.  I have bought scratch offs from over the counter, from numerous states, and they did not scan the ticket. They just grab the quantity I bought, collected the money, and I walked away.  No record of what I bought or when I bought it. This applied in new Jersey, Texas, Oklahoma, New York, and Pennsylvania.   Therefore, for the purpose of scratch-offs, my position is valid.  The state have no idea of who bought what or when they were bought; only where it was bought.  Once again, the only revelant date reference is the expiration of the card. I could cash it in 30 days. I could cash it in 60 days. I could cash it 120 days.  No one would know.

                        For the purpose of residency, all I need is a lease agreement.  There are hundreds of those forms on the internet, or one could create one in ten minutes of semi-creative thinking.  Who would I have a lease with?  My brother could lease me a spare room for one day or one year, or ten years. It doesn't matter.  It happens all over the country.  I know, for a fact, my dad, had a lease with his borther, renting him the upstairs of a duplex.  The date of that lease if the legal date of residency.  There is no law requiring a drivers license, if you don't drive.  A state ID is a convenience, not a requirement.  Not in Oklahoma any way.  Therefore, with a back-dated lease, from my brother, I could be a resident of Oklahoma six weeks ago.  I currently have tickets from Oklahoma for Powerball.  Guaranteed, if I hit their $125M jackpot tonight, then the test will begin.

                        After all, tax evaders rarely go directly to jail.  With a few hundred million, I could afford to plea-bargain.  That sort of activity, especially from the rich and famous, or just plain rich, is done every day. They are caught with illegal guns and walk away.  They are caught drunk and walk away. They are caught completely stoned and walk away. They are caught evading taxes and walk away. Happens every day.  It is the luck of being able to afford good lawyers instead of fast-Freddie on the corner lot.  The most I would have to pay is the taxes and a penalty.  Instead of immediately loosing four or five million to a state, I'd take the chance.  I could save, say, six million, or pay six million, plus another million in penalties.  Those are execellent odds.

                        Each book of tickets are activated before sold.  The dates of activation would indicate the time period to when the ticket was bought.  Winners before or after the tickets bought would indicate the time the ticket was cashed in.

                         

                        If you bought five tickets and I bought the five after you.  If you won a million,  and I won only a ticket.  When I collected my ticket the ticket you bought was then registered as being bought before mine.

                             OLD/Vtrac   Lottery Bible         Double Warnings      Thumbs Up TN F34/F44

                          KyMystikal's avatar - Lottery-016.jpg
                          Clarksville,Tennessee
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                          Posted: April 23, 2008, 11:22 pm - IP Logged

                          Thanks.  I live in Alabama, which has a state tax, and buy tix in Florida, which has no state tax.  I know i'll probably never hit the big JP but if I ever got 5 out of 6 I would like to know about my tax situation.  thanks!

                          I remember before I started playing online, I used to go visit in Alabama then drive down to Atmore on the border to play Florida. Boy, those were the days, lol.

                          I love doubles and remember, it's just a game!!!!!!

                            four4me's avatar - gate1
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                            Posted: April 23, 2008, 11:40 pm - IP Logged

                            Hummmmm ... something doesn't add up.  I have bought scratch offs from over the counter, from numerous states, and they did not scan the ticket. They just grab the quantity I bought, collected the money, and I walked away.  No record of what I bought or when I bought it. This applied in new Jersey, Texas, Oklahoma, New York, and Pennsylvania.   Therefore, for the purpose of scratch-offs, my position is valid.  The state have no idea of who bought what or when they were bought; only where it was bought.  Once again, the only revelant date reference is the expiration of the card. I could cash it in 30 days. I could cash it in 60 days. I could cash it 120 days.  No one would know.

                            For the purpose of residency, all I need is a lease agreement.  There are hundreds of those forms on the internet, or one could create one in ten minutes of semi-creative thinking.  Who would I have a lease with?  My brother could lease me a spare room for one day or one year, or ten years. It doesn't matter.  It happens all over the country.  I know, for a fact, my dad, had a lease with his borther, renting him the upstairs of a duplex.  The date of that lease if the legal date of residency.  There is no law requiring a drivers license, if you don't drive.  A state ID is a convenience, not a requirement.  Not in Oklahoma any way.  Therefore, with a back-dated lease, from my brother, I could be a resident of Oklahoma six weeks ago.  I currently have tickets from Oklahoma for Powerball.  Guaranteed, if I hit their $125M jackpot tonight, then the test will begin.

                            After all, tax evaders rarely go directly to jail.  With a few hundred million, I could afford to plea-bargain.  That sort of activity, especially from the rich and famous, or just plain rich, is done every day. They are caught with illegal guns and walk away.  They are caught drunk and walk away. They are caught completely stoned and walk away. They are caught evading taxes and walk away. Happens every day.  It is the luck of being able to afford good lawyers instead of fast-Freddie on the corner lot.  The most I would have to pay is the taxes and a penalty.  Instead of immediately loosing four or five million to a state, I'd take the chance.  I could save, say, six million, or pay six million, plus another million in penalties.  Those are execellent odds.

                            MeFirstYouLast wrote:    Hummmmm ... something doesn't add up. I have bought scratch offs from over the counter, from numerous states, and they did not scan the ticket.


                             

                            All the tickets that are for sale were scanned before they were placed in the dispenser or behind the counter or wherever they are kept.  

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                              NY
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                              Posted: April 24, 2008, 3:01 am - IP Logged

                              KYFloyd

                              In some states (those that don't allow one to remain anonymous) the back of the ticket contains a consent to a press release.

                              This consent is made when the person purchases the ticket.

                              They have to sign it to collect a winner, but the purchase date on front of the ticket is the date the pres release was "agreed".

                              Look at the back of one of your tickets and see if there's anywhere to write the date along with your signature. There's no date on the signature block, it's on the front.

                              I'm looking at the back of a Mega Millions ticjet right now, and this is the signature block:

                              Name

                              Address

                              City    State    Zip   Phone

                              Signature

                              The only dates on the ticket are on the front, the purchase date and date or dates (if multi-draw) of the drawing.

                              I seriously doubt any state would let someone slide with the taxes on $100,000,000 or so based on a move that is an obvious tax dodge.

                              Your residence and your tax obligations have nothing to do with whether or not you've agreed to a press conference (you have absolutely no control over a press release), or when you signed the ticket. Tax liability only happens when you have constructive possession of the income. You aren't entitled to a dime until the drawing makes you a winner, so you have no tax obligation until the drawing. That means that moving any time before the drawing isn't tax evasion, and the state you used to live in has no claim against income from after you moved, if that income comes from another state. If you bought  a 1 year subscription to an out of state lottery , moved to that state 3 months later and won in another 6 months I'm guessing it would never even occur to you to think you might owe tax on the prize to your old state. Buying a ticket 2 days before the drawing and moving 1 day before the drawing is no different. You moved before you had any right to the income.

                              Of course you're right that a state is going to want any tax they're entitled to on a big prize. That's why you need to be able to prove that your residence really changed, and when it changed. I'll cover that in the next post.