Payment of Lottery Prizes

Reply #23

justxploring — Sun, 23 Dec 2007 01:08:15 GMT

I agree. That's why I never took the chance. I've opened accounts online in the past, but only with US Banks and also ones that were covered by FDIC and I knew were recommended. Even your local bank might offer a higher rate for an account opened online.

Speaking of foreign investments, when I visited Costa Rica there were many Americans investing in The Brothers and it wasn't a bank, but sort of a secret that everyone seemed to know about. These people told me they were earning aroun... [ More ]

Reply #22

bashley572 — Fri, 21 Dec 2007 12:38:42 GMT

Justxploring -

MLN Bank - interesting. I just looked them up...

Millennium Bank is a subsidiary of United Trust of Switzerland, SA, a Swiss-registered private trust company that was founded in 1931. United Trust of Switzerland is located in the heart of Geneva's financial district and has its registered office in the Canton of Zug. United Trust of Switzerland's extensive experience in the financial services sector

Unless you know someone (or a large firm here in US) you trust that has... [ More ]

Reply #21

sirbrad — Fri, 21 Dec 2007 12:09:33 GMT

When I won $2600 on the Big 4, I got all the cash up front and the store files the claim to get the money back. I must say I was ecstatic. They said anything over $2500 I would have to wait. So I saved a lot buy having two winning tickets 50/50 for $2500 and $100 boxed/straight.

Reply #20

justxploring — Fri, 21 Dec 2007 08:43:27 GMT

Sorry about the tax, but that means you won something!

Good for you. I haven't won anything that even required a claim form yet. I'm just very careful with taxes because I got bad advice a very long time ago. I cannot be all things to myself, and I know I need to consult with experts from time to time, but self-education contributes to self-empowerment which keeps the consumer from getting into too much trouble.

By the way, I called the IRS this year when filing and they were very h... [ More ]

Reply #19

KY Floyd — Fri, 21 Dec 2007 08:08:27 GMT

If you and the IRS have a difference of opinion on how it works, who do you suppose is going to win the argument?

Let's look at what the IRS says again: payment of winnings is considered made when it is paid, either actually or constructively

You see the part that says actually or constructively ? There's a reason they don't just say when it is paid . As soon as the state runs the winning numbers through the computer they can identify the winner, even though they don't have a name. I... [ More ]

Reply #18

psykomo — Fri, 21 Dec 2007 01:46:43 GMT

Great post>>>>>>>>JP:

My reason to say great post is tied to a LP new's ARTICLE^^^^^^

QUOTE:

IT's about the truth in Goverment Busald said,..............................

telling player the truth doesn't hurt your sales ^^^^^^^^^^^^

LOL>>>>>post a >>>JP:

PSYKOMO

Reply #17

TheGameGrl — Fri, 21 Dec 2007 01:05:58 GMT

Cute Coin Toss! I'm calling that hot line for the Caymans!

Justex- Good post and good replies from folks! Its always a blessing when folks can assist in weaving thru the IRS verbage.

I agree the IRS is the highest one for paying into so it makes sense to concentrate on that foremost. I only mentioned the local because last year I got nailed on local for a lottery win from my state. I had no idea I had to pay that since the state didnt take any out.

Best to you

Reply #16

Coin Toss — Fri, 21 Dec 2007 00:22:05 GMT

OK, just to post:

Hello, you've reached the law offices of Q.P. Cash and Ann Nuitee, if you've won a jackpot, press 1, if you want the flight schedule for planes to Geneva, press 2, for the Bahamas and the Cayman Islands, press 3. Have a lucky day.

Reply #15

justxploring — Thu, 20 Dec 2007 20:41:58 GMT

I know more than 1 person who paid good money to a tax professional who made errors. Fortunately they were able to send in an amended tax return. It's amazing how many people are unfamiliar with the lottery rules anyway. I know a very intelligent, successful financial advisor who hasn't a clue about lump sum payments, etc. The amount of jackpot winners in Florida are maybe 7 or 8 a year, right? So how many times do you actually think an accountant or attorney will have a client that won the... [ More ]

Reply #14

Lucky Cliff — Thu, 20 Dec 2007 19:44:10 GMT

justxploring....here is what I read on the IRS statement you posted, which is below.

When Paid

A payment of winnings is considered made when it is paid, either actually or constructively, to the winner. Winnings are constructively paid when they are credited to, or set apart for, that person without any substantial limitation or restriction on the time, manner, or condition of payment. However, if not later than 60 days after the winner becomes entitled to the prize, the winner chooses the... [ More ]

Reply #13

justxploring — Thu, 20 Dec 2007 18:46:26 GMT

Four4me, I would never call you ignorant. We all rush through boards.

Yes, I totally agree with you about the pick 4. In fact, when I started this thread, I was thinking of a smaller prize amount too. Notice I only mentioned $50,000 because I've been playing Fantasy5 and, as silly as it sounds, thought what if I win $50,000 this week? (That's what happens in the middle of the night when I can't sleep.) I'm in a lower bracket this year so I'd love to get the money now, but from everythin... [ More ]

Reply #12

four4me — Thu, 20 Dec 2007 18:37:32 GMT

excuse my ignorance in my last post i did read all what you wrote but misinterpreted it.

On the other hand lets say someone won 20 grand today playing pick 4 they could cash 2 tickets today and two tickets next year before the time is up allowing them to put 10 grand on this years taxes and 10 grand on next years taxes. This might benefit someone who files taxes and is at or below an income threshold and doesn't want to be in a higher tax bracket by claiming the whole 20 grand on this years... [ More ]

Reply #11

justxploring — Thu, 20 Dec 2007 18:34:44 GMT

I have a different take on the situation you outlined above, winning in Sept or Oct and waiting until January.

I think we both agree, unless I'm not reading you right. There can't be 2 different interpretations from what I'm reading.

The IRS says that you must be taxed on the year you win unless it's less than 60 days from the end of that year. So you can hang onto your ticket as long as you want (depending on the state and the amount of days you have before expiration) but you will st... [ More ]

Reply #10

justxploring — Thu, 20 Dec 2007 18:26:53 GMT

Don't you mean for December 2007 by April 15, 2008 and for January 2008 by April 15, 2009

Yes, Lucky. Of course. Just an oversight. It's like all the people in a couple of weeks who will be mailing mortgage, car payments and rent checks with January 2, 2007. I meant to write if you claim the money in 2007 you'll have to pay the $5 million by April 2008 for the year 2007.

I've worked on commission where I didn't get paid for several months, so I know you get taxed in the year you... [ More ]

Reply #9

Lucky Cliff — Thu, 20 Dec 2007 16:59:45 GMT

If the claim is for December 2007, you'll have to pay the $5 million by April 15, 2007, but if the claim is in January of 2008, the $5 million isn't due until April 15, 2008. The difference of two weeks gives you an extra year to draw interest on the $5 million.

Don't you mean for December 2007 by April 15, 2008 and for January 2008 by April 15, 2009?

Question for any tax pros out there, on the January 2008/April 15, 2009 scenario; would the IRS require an estimated payment durin... [ More ]

Reply #8

Lucky Cliff — Thu, 20 Dec 2007 16:48:19 GMT

TheGameGirl....you are forgetting one other major point in calculating how long a state lottery should take in completing a payout. They have to collect the money from the lottery retailers. While this doesn't take the 6 weeks the lottery sets aside, it in all fairness takes longer then one day and 12 minutes. And yes they have reserves, but probably not enough to cover a large multi-million dollar jackpot.

Reply #7

Lucky Cliff — Thu, 20 Dec 2007 16:39:02 GMT

justxploring....I have a different take on the situation you outlined above, winning in Sept or Oct and waiting until January. First what I would do is break down the IRS statement as follows:

When Paid

A payment of winnings is considered made when it is paid, either actually or constructively, to the winner. Winnings are constructively paid when they are credited to, or set apart for, that person without any substantial limitation or restriction on the time, manner, or condition of payme... [ More ]

Reply #6

justxploring — Thu, 20 Dec 2007 08:15:52 GMT

Of course lottery prizes are taxable income! That was never part of this discussion. I don't think you read my original post, since I highlighted an entire paragraph from the IRS. This was about advantages or disadvantages of claiming in Dec or Jan. See the yellow highlighted portion above.

Reply #5

four4me — Thu, 20 Dec 2007 06:54:11 GMT

lottery prizes are considered unearned income and should be reported to the irs go to their website.

Reply #4

justxploring — Thu, 20 Dec 2007 06:37:32 GMT

Thanks, GameGrl. There are no state taxes in Florida however, so I only would care about the IRS ruling on this matter.

I do agree with you about the time it probably really takes to process a claim. The other guy wants to hang on to his money as long as possible. Try sending a claim to an insurance company

Reply #3

Stack47 — Thu, 20 Dec 2007 02:02:31 GMT

I was just curious, since I've often read press releases where someone wins a big jackpot in late Dec and claims the prize immediately and thought Why didn't he just wait a few days?

Let's say you win $50 million (and it will be really neat if do). The IRS deducts 25% or $12.5 million for taxes but you'll probably owe another 10% when you file your taxes. If the claim is for December 2007, you'll have to pay the $5 million by April 15, 2007, but if the claim is in January of 2008, the $5 m... [ More ]

Reply #2

LckyLary — Thu, 20 Dec 2007 01:03:44 GMT

When I won 6300 in nj they sent me 4600 after withholdings. Then I had to add 6300 income to my next tax return! But you can deduct whatever you spent to win.

When The Jack Man won PB he got 113 million lump sum after taxes .

In general anything over 600 dollars the machine says FILE CLAIM and you have to fill out a form, send to Lottery HQ (or go in person i guess???) and then wait for the check a few weeks later, as they immediately withhold income taxes, because they're afraid you mi... [ More ]

Reply #1

TheGameGrl — Thu, 20 Dec 2007 00:37:51 GMT

May I first say, May blessed winnings be bestowed upon you so you can find out the answer! In the meantime, after much consideration of your question, Going to the claims office upon winning simply bumps up your check receipt date. With that in mind, it doesnt change the fact that the witholdings will still transpire and your local tax will still want their hand out. So pay today, pay tomorrow, its just a matter of time. With technology in electronic banking its less then 6 weeks for full payou... [ More ]

Payment of Lottery Prizes

justxploring — Wed, 19 Dec 2007 21:20:45 GMT

Since 2007 is coming to an end, I was wondering what I would do if I won a jackpot in the next 2 weeks (I can only hope!) because I've read so many different versions of the tax laws. I'm also not sure if smaller prizes like $50,000 are paid right away or if there is still a waiting period.

Here is a statement from the IRS

When Paid

A payment of winnings is considered made when it is paid, either actually or constructively, to the winner. Winnings are constructively paid when they a... [ More ]