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TAX DAY: Proof that calculating 35% federal taxes is wrong

Topic closed. 5 replies. Last post 3 years ago by joshuacloak.

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Todd's avatar - Cylon 2.gif
Chief Bottle Washer
New Jersey
United States
Member #1
May 31, 2000
21216 Posts
Offline
Posted: April 18, 2011, 4:55 pm - IP Logged

So many people think they know-it-all when it comes to tax rates!

As we all know (or as we all SHOULD know), the lotteries withhold 25% federal taxes when you claim a jackpot.  If you were to go to USA Mega's Mega Millions Jackpot Analysis or Powerball Jackpot Analysis, you would see the amount of money you would win after taxes are withheld.

Yes, it shows the correct 25% withholding, not 35% or 36% or whatever tax rate some people will chime in with.

I get e-mails from time to time from people who are very upset that "the correct taxes are not being shown".  I try to reason with them, and in fact I have included quite detailed notes on both of the Jackpot Analysis pages explaining why the taxes shown are correct.

So today is officially tax day in the USA, a few days later than normal because of an obscure holiday in Washington, D.C.  It's a good day to look at a concrete example of a wealthy guy NOT paying 35% or 36%.

Whose taxes should we look at as an example?  How about the President of the United States?

I can't think of a better example because the guy makes more money every year than most jackpot winners, and his taxes are publicly scrutinzed by millions of people.

ABC News published a news story about the president's taxes today.  You can find the story right here: http://abcnews.go.com/US/wireStory?id=13401680

The Obamas' adjusted gross income for 2010 was $1.728 million, meaning his gross income was even higher.

Their total federal taxes paid (after receiving a $12,334 refund) was $453,770.

The Obamas did make some charitable contributions and such, but their total given to charity was not some outrageous amount -- just $245,075, or 14.2% of their adjusted gross income.

So what was the Obamas' federal income tax rate for 2010? 

26%

Keep in mind, a lottery winner with a lot more incentive to shave their tax bill could certainly do even better than Obama did.  They wouldn't have to worry about the political consequences of millions of people scrutinizing their returns.

Heck, a lottery winner with a decent tax attorney might even be able to get a refund.

Happy tax day!

 

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    Guru101's avatar - rw6jhh
    Indiana
    United States
    Member #48725
    January 7, 2007
    1841 Posts
    Offline
    Posted: April 18, 2011, 5:38 pm - IP Logged

    So many people think they know-it-all when it comes to tax rates!

    As we all know (or as we all SHOULD know), the lotteries withhold 25% federal taxes when you claim a jackpot.  If you were to go to USA Mega's Mega Millions Jackpot Analysis or Powerball Jackpot Analysis, you would see the amount of money you would win after taxes are withheld.

    Yes, it shows the correct 25% withholding, not 35% or 36% or whatever tax rate some people will chime in with.

    I get e-mails from time to time from people who are very upset that "the correct taxes are not being shown".  I try to reason with them, and in fact I have included quite detailed notes on both of the Jackpot Analysis pages explaining why the taxes shown are correct.

    So today is officially tax day in the USA, a few days later than normal because of an obscure holiday in Washington, D.C.  It's a good day to look at a concrete example of a wealthy guy NOT paying 35% or 36%.

    Whose taxes should we look at as an example?  How about the President of the United States?

    I can't think of a better example because the guy makes more money every year than most jackpot winners, and his taxes are publicly scrutinzed by millions of people.

    ABC News published a news story about the president's taxes today.  You can find the story right here: http://abcnews.go.com/US/wireStory?id=13401680

    The Obamas' adjusted gross income for 2010 was $1.728 million, meaning his gross income was even higher.

    Their total federal taxes paid (after receiving a $12,334 refund) was $453,770.

    The Obamas did make some charitable contributions and such, but their total given to charity was not some outrageous amount -- just $245,075, or 14.2% of their adjusted gross income.

    So what was the Obamas' federal income tax rate for 2010? 

    26%

    Keep in mind, a lottery winner with a lot more incentive to shave their tax bill could certainly do even better than Obama did.  They wouldn't have to worry about the political consequences of millions of people scrutinizing their returns.

    Heck, a lottery winner with a decent tax attorney might even be able to get a refund.

    Happy tax day!

    That's good cuz I bought me a Decades of Dollars ticket. The payout is $250,000 a year for 30 years - $7,500,000. However the cash option is $4,000,000.

      $4,000,000

    - $1,000,000 (25% Federal Income Tax)

    - $   240,000 (6% Kentucky State Income Tax)

    ----------------------------------------------

      $2,760,000!!!!!!!!!!!!!!!!

    Party

    Gonna win.Big Smile

      ttech10's avatar - blobdude
      Texas
      United States
      Member #92332
      June 5, 2010
      750 Posts
      Offline
      Posted: April 18, 2011, 7:31 pm - IP Logged

      Thanks for this. Usually I just look at Montana on the 'Jackpot Analysis' since they have a 10% tax which would move the witholdings to 35%. With the current Mega Millions JP that's an additional $800,000 that I could potentially have and $2.8m for Powerball.

        dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
        Oklahoma
        United States
        Member #82391
        November 12, 2009
        4886 Posts
        Offline
        Posted: April 18, 2011, 8:53 pm - IP Logged

        Thanks for the info ToddThumbs Up

          RJOh's avatar - chipmunk
          mid-Ohio
          United States
          Member #9
          March 24, 2001
          17406 Posts
          Offline
          Posted: April 18, 2011, 9:21 pm - IP Logged

          Don't forget city income taxes.  I noticed my city has added gambling and lottery winnings to its list of taxable incomes at 1.5%.  That wasn't true in 2002 when I matched 5of6 in the Ohio Super Lotto for $1500.

          * Thoses who can, do * 
          * thoses who can't, just talk *
          Roll Eyes 

            joshuacloak's avatar - avatar 23415.gif

            United States
            Member #32537
            February 12, 2006
            639 Posts
            Offline
            Posted: April 18, 2011, 9:34 pm - IP Logged

            35% is for max rate their todd,  with tax credits and tax deductions, if your a student or not/ etc all  apply to tax rate

            and i total agree with you on the get best tax lawyer you can.

            but at the end of a day , if  say someone won 100m cash in a large jackpot

            if said person don't give a <snip> about donating money away ,  a winfall the irs wants it all.

            but before i posted this, i Had restudy ways to tax "avoid" to point out some stuff i already knew and would like to share/reshare

            here are ways rich flat out play dodgeball with irs.

             

            they use the potential of your spouse’s offshore status. to hold offshore profits.  aka married someone who does not play irs for their profits oversea's

            moved their band’s income to another offshore holding company in Netherlands to wallow in the happiness of tax free loyalties

            what's really intresting is how the billionaires do it

            1 must of their income is from dividends so their rate for 2010 would of been 15% , and not 35% max tax the rich people thinking

            so when their tax rate in 15-20% area, its the dividends that lowered it to that amount people. the max tax rate sure is 35% on income if you file, but their so many ways to sidestep that its a sick joke to the rich.

             

            the number 1 way for a jackpot winner to screw the govt is to abuse the fact of  Gambling  lose's taken off agiant  Gambling winnings they tax you on

            only a major lottery winner could pull off what i have planned thro.

            govt max rate for gambling is 35%, seeing as amounts are sky high for pb and mm i had to think of proven ways to screw them out of ever penny i could by their own tax code/laws

            You can take a deduction up to the amount of your gambling gains. so must people can't deduct all their lose's

            seeing as whoever plays pb/mm thro just won say 50m cash, this would now work in our favor, spend/bet as much as they can bet, its all game now

            their also invest money while taking money in, but offset with investment costs plan.

            plus if you had the brains and wanted to, just  start your own company that year, that makes a bit of profit per say, yet you on propuse over spend/invest is the company that startup year

            tax deduction for losses you have as result of, among other things:

            • Your trade or business
            • Any non-business activity you undertake "for profit," that is, to make money or produce income

            Now you have set up a  future income as a business, but whatever profits they made that first tax year, you get to write off sense you did it to grow/setup perfect company before showballing of profits rolls in

             

            but my plan is much more evil :D

            sense on winnings vs loss's that year

            i plan to bet millions and millions on lottery games, i risk  a lot, whatever i don't put in put in dividend paying stocks, and buying nice items, goes to playing the lottery that remaining tax year.

            if i win a other big amount, woot , if i lose, o will its just a write.   charity, i got a charity, its called your self!,

            i got other plans to ofc

            if i won the lottery amount in high millions  , but i can't say anything sense i need to do it behind closed doors for it to be flawless victory., can't have congress do their retroactive taxes on my plans like kind folks of DC city  area did to their DC lottery powerball winner, greedy people at heads of govt, can't be trusted

            , their are indeed more ways then 1 to skin the cat per say. so get best tax lawyer you can find, and beat the living crap out of ever loophole they put in their tax code! 

            their job is to be evil and steal ever penny they can for us, our job is keep ever penny we can for Our money. 

            so ya, tod right, a dumb lottery winner thro will pay 35% on a mm/pb largejackpot thro is my point , even that lottery changed my life show, did a story of a florida couple , thinking it was only  paid 25%, buyed a house and a truck, moved up to tn,  then got hit with that added tax bill come tax day., above the 25% they withholded already , and was in shock as no one told them they owned more then 25% the lottery withholded, LOL, dumbies don't see it coming, or learn how to avoid that high rate area . so person by person thing.

             

            and remb, a none profit or other like entity can claim the jackpot in must states tax free, no withholding,

            , and will, the irs would not be happy folk. even more so if they happy to be a overseas charity  that has a usa base also

            , Oh , o ya i just given you a hint to must evil plot ever. world wide charity, claims in usa, sends the money over seas, to a more"friendly" charity nation their in also , that nation just so happens to  have no rules per say of what their chairty does with the cash. their ceo's over in that nation can be making hell 90% of money even,  lets put it this way,  it takes a evil genius to notice the bs their getting away with

            , i know cease i have studyed flat out overseas charity waste, the irs won't tax a penny here, allows large charity's here based in many nations, to send money to their sister charity per say in other nation, google wasteful oversea's charity , and prepare to be dumb founded at in your face wasteful spending, if you think govt bad with money, you should see these people in action

             

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