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California nail technician wins $228M Powerball jackpot

Topic closed. 57 replies. Last post 2 years ago by txn0002.

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dpoly1's avatar - driver
PA
United States
Member #66141
October 16, 2008
1672 Posts
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Posted: September 29, 2014, 10:11 pm - IP Logged

The top federal tax rate may very well be 39.6% but that doesn't apply to lottery winnings as that is subject to a flat 25% federal deduction.

Not sure where you got the 13.3% California income tax rate but according to USA MEGA California doesn't have a state income tax. How can they even contemplate implementing a future state income tax when there is none to begin with?

That 25% is just the initial withholding. The tax rate is still 39.6%. You still owe the difference unless you mitigate your tax burden.

dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

 

Eschew Poverty ........... Vote Conservative!

    RedStang's avatar - tallman zps6gf4inoc.jpg
    NY
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    Member #121961
    January 21, 2012
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    Posted: September 30, 2014, 1:35 am - IP Logged

    Not sure if i would ask but I wonder if got paid for the 1+1 and the 3 other pb hits on that ticket.

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      California
      United States
      Member #141204
      April 7, 2013
      280 Posts
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      Posted: September 30, 2014, 2:18 am - IP Logged

      The top federal tax rate may very well be 39.6% but that doesn't apply to lottery winnings as that is subject to a flat 25% federal deduction.

      Not sure where you got the 13.3% California income tax rate but according to USA MEGA California doesn't have a state income tax. How can they even contemplate implementing a future state income tax when there is none to begin with?

      California does indeed have a 13.3% top tax rate.

      http://www.bankrate.com/finance/taxes/state-taxes-california.aspx

      "12.30 percent on taxable income of $508,501 and above." 

      "1 percent surcharge, the Mental Health Services Tax, is collected on taxable incomes of $1 million or more, making California's highest marginal rate 13.30 percent"

      Currently, the state of California does not tax lottery winnings but that could all change. New Jersey went from having zero income tax on lottery winnings to having an 11% state tax on lottery winnings. 

      "N.J. Lottery goes from zero to highest tax rate in the USA"

      http://www.lotterypost.com/news/196448

      If it happened in NJ, it could happen in CA. This is a 30 year annuity Mr. Nguyen signed up for. Lots of things can happen in 30 years. If CA goes through another 

      budget crisis like they did in 2008 to 2012 you had better believe the state government will look for every source of tax revenue which may or may not include a tax on lottery winnings.

      "The U.S. state of California had a budget crisis in which it faced a shortfall of at least $11.2 billion,[1] projected to top $40 billion over the 2009–2010 fiscal years"

      http://en.wikipedia.org/wiki/2008%E2%80%9312_California_budget_crisis

      So if you signed up for the 30 year annuity you may be looking at a potential of a 52.9% marginal tax rate (39.6 + 13.3) on your annual income from the lottery. Personally, I'd take the cash instead of the annuity pay all income taxes for 2014 up front, then move to Nevada and live there 183 days out of the year to become a Nevada resident and pay zero state income tax on future earnings.

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        New Jersey
        United States
        Member #21206
        September 4, 2005
        949 Posts
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        Posted: September 30, 2014, 7:04 am - IP Logged

        First thing you did wrong,  was assume again...You know what they say about that.    Second,  everyone should have an option of claiming anonymously,  no matter what state.

        Well, if I were a conspiracy theorist, and I wanted people to think that I wasn't out of my mind (even though most people would see through it and realize that I was in fact out of my mind), I would certainly argue for anonymous prizes.   This was I could claim that Obama was winning every prize in California.

          Skibunnylk's avatar - Lottery-059.jpg

          United States
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          July 28, 2014
          139 Posts
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          Posted: September 30, 2014, 2:19 pm - IP Logged

          That 25% is just the initial withholding. The tax rate is still 39.6%. You still owe the difference unless you mitigate your tax burden.

          Thanks for the clarification as I took the assumption that just 25% federal tax was withheld because the media keeps touting after tax numbers and I thought it was the final figure. Just goes to show you how manipulative the media is in distorting the true facts.

            Skibunnylk's avatar - Lottery-059.jpg

            United States
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            July 28, 2014
            139 Posts
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            Posted: September 30, 2014, 2:23 pm - IP Logged

            California does indeed have a 13.3% top tax rate.

            http://www.bankrate.com/finance/taxes/state-taxes-california.aspx

            "12.30 percent on taxable income of $508,501 and above." 

            "1 percent surcharge, the Mental Health Services Tax, is collected on taxable incomes of $1 million or more, making California's highest marginal rate 13.30 percent"

            Currently, the state of California does not tax lottery winnings but that could all change. New Jersey went from having zero income tax on lottery winnings to having an 11% state tax on lottery winnings. 

            "N.J. Lottery goes from zero to highest tax rate in the USA"

            http://www.lotterypost.com/news/196448

            If it happened in NJ, it could happen in CA. This is a 30 year annuity Mr. Nguyen signed up for. Lots of things can happen in 30 years. If CA goes through another 

            budget crisis like they did in 2008 to 2012 you had better believe the state government will look for every source of tax revenue which may or may not include a tax on lottery winnings.

            "The U.S. state of California had a budget crisis in which it faced a shortfall of at least $11.2 billion,[1] projected to top $40 billion over the 2009–2010 fiscal years"

            http://en.wikipedia.org/wiki/2008%E2%80%9312_California_budget_crisis

            So if you signed up for the 30 year annuity you may be looking at a potential of a 52.9% marginal tax rate (39.6 + 13.3) on your annual income from the lottery. Personally, I'd take the cash instead of the annuity pay all income taxes for 2014 up front, then move to Nevada and live there 183 days out of the year to become a Nevada resident and pay zero state income tax on future earnings.

            Thank you for the update. I didn't realize California had a state income tax and was shocked to see that at 13.3% it is probably the highest in the nation. You are absolutely correct about California possibly changing their guideline in the future on not charging a state tax on lottery winnings as that state is in dire straits financially.

              Skibunnylk's avatar - Lottery-059.jpg

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              Posted: September 30, 2014, 2:25 pm - IP Logged

              Not sure if i would ask but I wonder if got paid for the 1+1 and the 3 other pb hits on that ticket.

              Lol! with the size of the jackpot that he won, he probably wasn't too concerned about a few extra dollars.

                Get paid's avatar - Lottery-062.jpg
                texas
                United States
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                February 11, 2014
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                Posted: October 1, 2014, 12:30 pm - IP Logged

                Congrats Mr. Nguyen,your life will now be forever changed. Normal is out the window.Again congratulations.

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                  California
                  United States
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                  April 7, 2013
                  280 Posts
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                  Posted: October 6, 2014, 7:01 pm - IP Logged

                  Congrats Mr. Nguyen,your life will now be forever changed. Normal is out the window.Again congratulations.

                  No one even knows what he looks like and Nguyen is a common surname for Vietnamese people. He'll be able to blend in and live a normal life if he wants just as long as he isn't driving around in flashy cars and wearing expensive clothes. 

                  It would be like if your name was Steve Smith and you won the lottery and no one knew what you look like. Someone could ask, "Are you the Steve Smith I read about in the newspaper?" and you could always say, "No. That's another Steve Smith not me."

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                    wisconsin
                    United States
                    Member #130754
                    July 23, 2012
                    198 Posts
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                    Posted: October 6, 2014, 11:55 pm - IP Logged

                    Thankfully, my name is Rusty Shackleford. A very common name in these parts.

                     

                    Wink

                      haymaker's avatar - Lottery-012.jpg
                      Egg Harbor twp.south Jersey shore
                      United States
                      Member #112968
                      June 29, 2011
                      3856 Posts
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                      Posted: October 7, 2014, 12:01 pm - IP Logged

                      California does indeed have a 13.3% top tax rate.

                      http://www.bankrate.com/finance/taxes/state-taxes-california.aspx

                      "12.30 percent on taxable income of $508,501 and above." 

                      "1 percent surcharge, the Mental Health Services Tax, is collected on taxable incomes of $1 million or more, making California's highest marginal rate 13.30 percent"

                      Currently, the state of California does not tax lottery winnings but that could all change. New Jersey went from having zero income tax on lottery winnings to having an 11% state tax on lottery winnings. 

                      "N.J. Lottery goes from zero to highest tax rate in the USA"

                      http://www.lotterypost.com/news/196448

                      If it happened in NJ, it could happen in CA. This is a 30 year annuity Mr. Nguyen signed up for. Lots of things can happen in 30 years. If CA goes through another 

                      budget crisis like they did in 2008 to 2012 you had better believe the state government will look for every source of tax revenue which may or may not include a tax on lottery winnings.

                      "The U.S. state of California had a budget crisis in which it faced a shortfall of at least $11.2 billion,[1] projected to top $40 billion over the 2009–2010 fiscal years"

                      http://en.wikipedia.org/wiki/2008%E2%80%9312_California_budget_crisis

                      So if you signed up for the 30 year annuity you may be looking at a potential of a 52.9% marginal tax rate (39.6 + 13.3) on your annual income from the lottery. Personally, I'd take the cash instead of the annuity pay all income taxes for 2014 up front, then move to Nevada and live there 183 days out of the year to become a Nevada resident and pay zero state income tax on future earnings.

                      Yea ! it could happen in Cali.

                      But would it happen in the middle of the night and be retroactive ?

                      Or maybe it would be by I & R

                      Yeah, I like to see that billboard on the freeways. LOL

                      Extraordinary Popular Delusions & the Madness of Crowds    -- Charles Mackay  LL.D.

                        JackpotWanna's avatar - squiz

                        United States
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                        March 23, 2004
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                        Posted: October 14, 2014, 3:17 pm - IP Logged

                        WTG!!! Very smart.

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                          New Member
                          Marina, CA
                          United States
                          Member #160109
                          October 19, 2014
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                          Posted: November 1, 2014, 5:36 pm - IP Logged

                          Yes. Nguyen is my last name too! But I didn't win. It could have been a Nguyen Nguyen situation.