State Tax

Reply #28

four4me — Thu, 05 Oct 2006 15:31:54 GMT

go to this web page and try your question here

http://www.justanswer.com/tax-question.asp?r=gatax

Reply #27

KY Floyd — Thu, 05 Oct 2006 05:42:03 GMT

Ever notice that people believe what they want to hear? If you win MM ticket this Friday and wait until March to claim your winnings, the IRs might be perfectly happy to collect the taxes in the following year. They're going to get their share either way, so waiting a year may not bother them. That doesn't mean they agree that you didn't earn the income this year.

The state may also be willing to wait another year, but whether it's this year or next, the state will expect you to pay taxes o... [ More ]

Reply #26

Preppy — Thu, 05 Oct 2006 04:27:21 GMT

It depends on which payment option you pick. If you select the lump sum option, you would most likely pay taxes in the year you gave your social security number and the lottery verified you were holding a valid ticket and the lottery deducted any delinquent debt owed to the state. Worst case scenario, you would have to file for an extension and/or file an Estimated Tax for Individuals.

If you pick the annuity option, for your first payment you would most likely pay taxes in the year you gav... [ More ]

Reply #25

CA LotteryGuy — Thu, 05 Oct 2006 03:59:57 GMT

St. Germain...so if I understand your thinking, the money becomes income when the claim is filed.

So to take this a step further, I bought the winning Mega Millions ticket in California for the June 1st drawing while visiting as a resident of Massachusetts. I take all my wordly possesions and physically move to California as of July 1st. I am now considered as resident of California as I not here on a tenative or transitory basis. I file a claim for my winnings on July15th. California d... [ More ]

Reply #24

rdc137 — Thu, 05 Oct 2006 03:02:32 GMT

If your state is New York, you can rest assured they will tax you to death on your winnings even if you move prior to claiming. New York makes up any excuse in the book to tax someone.

Reply #23

st.germain — Thu, 05 Oct 2006 00:12:38 GMT

In Illinois...as soon as you file your claim form is the presice time that the feds take their share of taxes...The state itself gives you a w4 / 1099 form ( i forgot wjich)((((which)))) at the time of filing for this years taxes...so NO..not in illinois you can't wait till next year THEY want it now...this year...just as soon as you can file your State income taxes.

Reply #22

justxploring — Wed, 04 Oct 2006 23:55:18 GMT

Agree except it might be sooner than that. Although it was about the IRS, not State tax, until DvDiva posted about this a few months ago I did not realize that you cannot wait until Jan or Feb of the next calendar year to claim your ticket just to avoid taxes. You have a total of 60 days, so unless you win after Nov 3rd (figuring 31 days in Dec and Jan 1 is a holiday) you still need to pay taxes for the year you win, not collect. I imagine a state is the same way. I'm no expert since I've onl... [ More ]

Reply #21

st.germain — Wed, 04 Oct 2006 23:49:21 GMT

Just don't show up after the expiration date.....don't be late

Reply #20

st.germain — Wed, 04 Oct 2006 23:47:37 GMT

Niether! You can wait a week or a month but it is when you come in and actually file and fill a claim form for your money. That is the time the IRS considers the win as income because at that time the process begins where papers are shuffled and gets to the disbursement dept so that they can cut a check. Also, this is the time they take out their federal taxes and such.

So, it is at the presice moment you walk in and file that claim.

Reply #19

CA LotteryGuy — Wed, 04 Oct 2006 19:26:33 GMT

I guess the key question remains when does the IRS consider the income as yours? For a lottery jackpot is it the day of the drawing, the day the lottery says you are a winner or when you get your check? And if you should move during this timeframe, I would imagine whenever the IRS says the income is yours, where ever you are living, that is where your state tax obligation would lie.

Reply #18

KY Floyd — Wed, 04 Oct 2006 19:07:52 GMT

With income earned from a job, your employer generally has a specific policy about when you get paid. A few people get paid at the end of the week for that week's earnings, but I think that the majority of people get paid sometime the following week, or even two weeks later. That would mean that if most of us earned $1000 during the last week of December we'd collect that $1000 sometime in January. When your W-2 or 1099 form shows up in February it will show what the company *paid* you during th... [ More ]

Reply #17

Preppy — Tue, 03 Oct 2006 16:05:57 GMT

I agree with the posts from a few months ago that US citizens are taxed on world wide income. If you are a US citizen and you win a tax free Canadian, a tax free UK, a tax free Irish or any other tax free lottery outside the US, your tax situation would most likely look like the Massachusetts and California situation mentioned earlier. You would have to pay state income taxes in addition to federal income taxes. If there is a gambling winnings tax treaty between/among the foreign country, the U... [ More ]

Reply #16

CA LotteryGuy — Tue, 03 Oct 2006 15:01:53 GMT

NY Floyd and Preppy thanks for your detailed answers. I guess the real question comes down to when is the money from a winning lottery ticket jackpot considered as income? KY Floyd you feel that happens when the draw occurs. For discussions sake, one could think that you are entitled to the money once the lottery verifies/validates your claim.

Another train of thought is you would not count the winnings as income until the money is in your possession. This would be similar as to how i... [ More ]

Reply #15

Coin Toss — Tue, 03 Oct 2006 04:53:22 GMT

Heres' why I brought it up, there was a story some 25 years ago or so about an American couple that won the Canadian lottery.

Canada paide lump sum, tax free. Uncle Sugar said Where's mone? So they moved to Canada.

Then, as the story went, they were told if they ever returned to the U.S. they owed the taxes.

Same principle as it's against the law to buy an Irish Sweepstakes ticket, but you owe taxes if you hit. How that works I'm not sure.

(How they going to know you hit... [ More ]

Reply #14

KY Floyd — Tue, 03 Oct 2006 04:51:51 GMT

Thanks. As far as I know, Preppy has it exactly right. I don't know exactly what the law says in Massachusetts, but the income of a Massachusetts resident will be subject to Massachusetts income tax according to the law. Nothing you do after moving out of Massachusetts can change the past, and before moving you would have been a resident. If you're really curious you might be able to scare up the specific rules with a google search, but the states generally have laws that spell out your tax obl... [ More ]

Reply #13

justxploring — Tue, 03 Oct 2006 04:32:45 GMT

I agree that MA would expect payment of the taxes. As I wrote above, I had a hard time with the Commonwealth of Mass when I moved to NH and requested a hearing. It wasn't granted, so I never got my day in court and I gave in and paid the tax before the penalty interest grew.

Lump sum is truly the best. Lump sum would most likely eliminate 95% of the problem of taxes if you decide to move or move more than once after winning the lottery. Why would you want to move from FL to NC af... [ More ]

Reply #12

Coin Toss — Tue, 03 Oct 2006 04:26:13 GMT

Let's make it a wee bit more interesting.

Let's say an American hits the Canadian lottery. Now what?

As far as I know, the U.S. is the only country that taxes gambling winnings.

Reply #11

Preppy — Tue, 03 Oct 2006 03:53:39 GMT

Yes, you would have to pay Massachusetts state income tax on the winnings. Massachusetts is rather stern when it comes to taxes. As you said you bought a MEGA Millions ticket in California when you were a resident of Massachusetts. California does not tax non-residents if they win a lottery that is played within the state of California. So you would not have a state tax obligation from California. You won MEGA millions when you were resident of Massachusetts. Each person that earns a wage in th... [ More ]

Reply #10

CA LotteryGuy — Mon, 02 Oct 2006 16:33:38 GMT

KY Floyd...your posting does a great job of outling the major points of state tax laws and lottery winnings. Best advice is to understand the tax implications before you make any moves.

How do you think this would play out. A resident of Massachusetts buys a MEGA Millions ticket while visiting California and wins the Jackpot. The person moves to California. According to California you are a resident when you are in California for other tenative or transitory purpose. After you move you

Reply #9

KY Floyd — Mon, 02 Oct 2006 15:09:10 GMT

The finer points of the tax laws get pretty complicated and the rules are different for each state, but here are some basic rules of thumb that will most likely apply:

* Income tax is based on income, and unless a specific form of income is exempted, you will owe taxes on it. A number of states exempt winnings from their own lotteries, but no state exempts winnings from out-of- statelotteries or gambling.

* The state in which you are a resident doesn't care where the income came fro... [ More ]

Reply #8

four4me — Mon, 02 Oct 2006 00:27:32 GMT

Taxation in this country is very complicate especially where large amounts of money are concerned. What might sound good in theory might be mist-rued when dealing with the bureaucracy. one thing is for sure if they figure they can get a piece of it they will.

trying to change location before cashing the ticket might work but might not. sine they might go back to the day it was purchased.

You could go to each lotteries website and read the tax rules concerning winning.

Reply #7

Preppy — Mon, 02 Oct 2006 00:02:41 GMT

I would like someone on this forum to engage in this futile exercise and notify us of the outcome.

I just don't believe it will be that easy. I don't think it will happen. Surely, somebody would have tried it by now.

I agree with st.germain.

Reply #6

Preppy — Sun, 01 Oct 2006 23:57:17 GMT

I always thought income was based on where it was earned, not where you live, but I've had a similar question.

Every state is the US has different tax policies. I live in California. California neither taxes residents nor taxes non-residents if they win a lottery that is played within the state of California. California does tax California residents on external lottery winnings (gambling winnings from another state). Furthermore, California does not tax winnings from Indian Casinos in Califo... [ More ]

Reply #5

st.germain — Sun, 01 Oct 2006 22:48:49 GMT

Oh! If that state doesn't have the Gambling Tax ...Then Illinois will find away to do the Gambling tax upon you. In Illinois...it is all about the money. And they want it...yours..theirs or anyones. Welcome to Illinois . Smile when bending over.

Reply #4

st.germain — Sun, 01 Oct 2006 22:45:13 GMT

First off, your going to pay the gambling tax in the state that you won the ticket....then secondly, upon returning to your home state and in the following spring ..you can expect to have to declare whatever is left of those winnings in the form of disbursement of monies as INCOME to the IRS and the state you live in (state taxes versus federal taxes). The state of ILLINOIS sees those disbursements as INCOME and therefore INCOME TAX and then proceed to tax you to death until you choke w... [ More ]

Reply #3

four4me — Sun, 01 Oct 2006 21:21:34 GMT

not if you claimed the winnings before you moved. I could be wrong. But this guestion has been hashed around before on lottery post.

it might also depend on whether you cashed the ticket in the state you won deposited the money there and didn't deposit any cash in you bank where you live. if you want to avoid paying taxes in you home state you might consider moving before you cash the ticket. Also some states don't consider you a resident until you have lived their a period of time like 30/6... [ More ]

Reply #2

justxploring — Sun, 01 Oct 2006 19:55:10 GMT

Preppy, I think the first suggestion, which is ask a good CPA or tax attorney, is the best answer. This is a good question. I always thought income was based on where it was earned, not where you live, but I've had a similar question. I live in FL and there is no state tax. I always wondered if I won money here and moved to a state where there is a 7% state tax if I'd have to pay that tax. If that is true, that's one more reason to take a lump sum. Also, if I win money next week in FL and th... [ More ]

Reply #1

Preppy — Sun, 01 Oct 2006 18:49:23 GMT

It is best to hire an excellent lawyer and an excellent CPA.

1. Does your home state (State A) tax out of state gambling winnings or out of state lottery winnings?

2. Are you taking the lump sum or annuity?

3. What was the win date of the lottery?

4. How close is it to your move date?

5. When is the prize paid out?

6. When did you receive it?

Once you answered the questions above, you would most likely get a couple of very different answers.

Assuming your home state (Sta... [ More ]

State Tax

nho607t — Wed, 13 Sep 2006 23:40:41 GMT

Here's a hypothetical question. What if you were on a business trip to a state that doesn't tax lottery winnings and purchased a lottery ticket. This ticket happened to win the jackpot. You then decided to move to that State on January 1st and establish residency there. Would you be able to avoid paying the State tax in the State you moved from