Winning the Jackpot and taxes.

Reply #52

joshuacloak — Tue, 02 Mar 2010 23:39:54 GMT

todays headlines i say go with the cash

take these clues

budget deficits projected to hit almost $1.6 trillion this year.

American reliance on government at all-time high

transfer payments from the government such as unemployment checks and Social Security burgeoned by $231 billion to $2.1 trillion. Mean while, the amount of taxes that individual Americans paid plummeted by $325 billion to $2.1 trillion as a result of middle-class tax cuts and because nearly 6 million people wer... [ More ]

Reply #51

jrosina — Tue, 02 Mar 2010 13:32:25 GMT

rd and I Agree Take the Cash and Run! Like Hello

Reply #50

rdgrnr — Tue, 02 Mar 2010 13:05:43 GMT

If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you?

In the current environment I would say it is a very reasonable fear. We now have the most unstable, inexperienced, undisciplined, irresponsible government in our nation's history. I wouldn't trust them in the outhouse with a muzzle on. Take the cash and run.

Reply #49

badboy00z — Tue, 02 Mar 2010 09:23:00 GMT

You will need tp pay income tax on your profits. Bascially no matter what you do the Government will find a way to take your money.

Reply #48

TheOtherOne — Tue, 02 Mar 2010 06:06:02 GMT

What I meant was, if you own property but rent it out or make money off it somehow (i.e. farmland with cattle or selling the grass on it as hay, etc) then you could recoup some of your property tax loss.

Not sure if it would make up the difference.

Obviously I have never owned investment property but it would be nice.

Reply #47

badboy00z — Thu, 25 Feb 2010 22:34:32 GMT

If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you? Our country is in a trillion dollar debt afterall.

If you take the lump sum cash and decide to just live off that without investing at all, is it possible to go broke just from paying taxes?

jwhou, you seem to be very well educated on this topic. If you won the JP, how will you go about securing your winnings? What kind of bank account will you get? Obviously a normal checking

Reply #46

jwhou — Thu, 25 Feb 2010 19:18:53 GMT

There was that one woman in California who was collecting $300,000 a year from Welfare. She only got caught because she was living in a rather large mansion. Whenever you have a system, people will find ways to abuse it.

It's all pretty sad because you know there are people out there who need the assistance but aren't getting it simply because they are too honest. I always thought that public assistance should be strictly on an outreach basis with periodic review by different social workers.... [ More ]

Reply #45

jwhou — Thu, 25 Feb 2010 19:10:27 GMT

Taxation residency is based on the concept of centers of vital interest . Source of income is a big one but is only one third of the picture, moving, closing old bank accounts, opening new ones, new memberships, selling property etc. goes a long ways to establishing a different tax residence. It's possible to avoid the state taxes of a lottery but it may always be necessary to file a return. It's more a matter of having to pay the state's taxes but being able to claim most of it back. Regardless... [ More ]

Reply #44

jwhou — Thu, 25 Feb 2010 18:59:17 GMT

I live in a state with no state income tax as well but I'm not sure if that's a blessing. The property taxes are inordinately high resulting in a very unfair distribution of the costs of state services. I would be more in favour of a consumption tax like a state sales tax then either property or state income tax as even the income tax is disproportionate with whom actually consumes public resources. People often criticize the lottery for taxing the poor yet apartment dwellers never complain abou... [ More ]

Reply #43

jwhou — Thu, 25 Feb 2010 18:51:58 GMT

When I say that taxes have traditionally been based on 50%, I'm referring to the genus of all taxation, the spice trade through the middle east where city states would seize half of a merchant's wares whenever they stopped in town to resupply. This 50% mark is reflected in the taxation laws of virtually every country in some ways and at some point in time has been and/or will be the maximum taxation rate. The 50% mark is most often seen in corporate taxes where they are less likely to alarm the... [ More ]

Reply #42

jwhou — Thu, 25 Feb 2010 18:44:26 GMT

Yes there are ways to minimize your loss of money through strategic investments but remember what brought us to our current economic collapse. There was a huge amount of wealth sitting in the various mutual funds and investment accounts all looking for AAA rated investment securities such that people found ways to repackage sub prime mortgage backed securities as AAA rated securities by creating derivatives, the rating programs at the time treated each derivative as an independent risk much as e... [ More ]

Reply #41

KY Floyd — Thu, 25 Feb 2010 17:15:40 GMT

There are 6 tax brackets, which were set in 2001 and expire at the end of 2010. The highest tax bracket has been, and remains at 35%. 39.6% was the top bracket for several years prior to 2010, and at some times in the past it has been much higher than that. Rates for 2011 and beyond have not been set, but we may see a return to 39.6%.

Reply #40

Bagent — Thu, 25 Feb 2010 09:41:12 GMT

iGlenn,

You are close with your figure, the highest IRS tax rate is 39.6%. Thank God I live in a state with no state tax so I will only have to worry about the Federal.

I agree with your other statement totallly. When dealing with that amount of money, why take a chance on messing it up. Having a Tax professional and Attorney is the only way to go.

If I have a jackpot size amount of money, you won't see me using TurboTax. I won't be doing any more than signing my name on the last page o... [ More ]

Reply #39

LadyMylena — Wed, 24 Feb 2010 00:27:22 GMT

Yes, that is an interesting idea! I would love to see the site, too.

Reply #38

badboy00z — Tue, 23 Feb 2010 21:38:11 GMT

What is this site that you speak of? That's a good idea. Never thought of that pool idea and having them pay their own taxes. Lol.

Reply #37

lucky6025 — Tue, 23 Feb 2010 14:36:05 GMT

New to this site,so to begin saying Hi to All.There is a website that has mm/pb drawings amounts and payouts with both federal and state taxes for each state in USA for annuity/cash buyout,which states take state taxes and which do not.MY opinion if won,would be cash buy out,example 76million this weeks powerball,in MA would get check for 25.69 after federal/state taxes.But before claiming this would get IRS for 5754 which is for players winning in a pool( you can find this on-line) each person

Reply #36

KY Floyd — Mon, 22 Feb 2010 21:44:26 GMT

I'm not sure what that 2nd sentence is supposed to mean, but property taxes and other costs of maintaining a rental property would be deductions that reduce the taxable income from the rent that's collected. No matter how long you own the property, you will owe some kind of income tax on any profit when you sell it, unless that income is exempted. There used to be a once-in-a-lifetime 125k exemption if you were over 55 and bought another home of equal or greater value. The rules have changed, an... [ More ]

Reply #35

KY Floyd — Mon, 22 Feb 2010 21:30:05 GMT

The lottery runs the lottery, period. They have absolutely no authority over rules ands regualtions about taxes or residency. Since the states aren't stupid you can expect that an income that comes from a state will be taxed by that state regardless of where you live. It's the source of the income that determines which state gets first claim on the income tax, not your residence. Just as a non-resident will pay taxes to the state that pays them a lump sum, a resident who moves will continue to p... [ More ]

Reply #34

TheOtherOne — Mon, 22 Feb 2010 20:59:53 GMT

True, but there are probably loopholes to get around this, or at least to lessen the blow.

For instance if you turn it into rental property, you could at least recoup some of those property taxes paid out by gaining incoming pay for your property.

Plus, if you hold the property for more than 2 years and sell it you do not have to pay capital gains tax. This can be especially nice if the value of it rises within that 2 years (or however long you hold on to it for).

Reply #33

badboy00z — Mon, 22 Feb 2010 07:06:30 GMT

You still have to pay property tax if you buy real estate.

Reply #32

badboy00z — Mon, 22 Feb 2010 00:36:39 GMT

I agree with you there. But I think income tax is bogus. People work hard for their dollar and the government just takes it away from you before you get your paycheck. Why should we have to pay to work?? Most of us working people don't see our tax dollars at work in our day to day routine. We have crooked cops and pot holes in the roads. Our tax dollars should be used to better our day to day lives.

Reply #31

Hermanus104 — Sun, 21 Feb 2010 23:14:08 GMT

That is the way that I feel it should be. You WON the money, therefore you should be able to do with it what you please without the government taking it away from you.

Reply #30

truecritic — Sun, 21 Feb 2010 21:39:36 GMT

sully16 explained that was for Section 8 people. Section 8 is a Federal Program. I admit I had heard of it but never knew details.

Google

So, lucky you, you can probably apply right where you live.

Reply #29

cosmotravis — Sun, 21 Feb 2010 19:52:31 GMT

if your on welfare here you can get 2000 cash 1500 for food thats 42,000 a year.

sounds like I better move to michigan.

Reply #28

cosmotravis — Sun, 21 Feb 2010 19:49:00 GMT

no kidden RDG, it's ashame people don't get smart

the working class is too busy working to care

and the poor class is too lazy to do anything about it.

Reply #27

TheOtherOne — Sun, 21 Feb 2010 16:39:27 GMT

What about tax shelters?

If you won a huge jackpot and took the lump sum of cash, you could invest it in various things such as Real Estate, small business, etc, and wouldnt that help to shelter you?

When I win the lottery (tsk tsk), I plan to invest a lot in Real Estate, Stocks, and becoming a pro Craps player [ :) ], so hopefully the Real Estate investments would help some.

Is this still the case

Reply #26

truecritic — Sun, 21 Feb 2010 16:08:23 GMT

So, those balances are off the Bridge card? Are they also immigrants

Reply #25

sully16 — Sun, 21 Feb 2010 15:31:29 GMT

i'm a cashier i see their balances every day these are the section 8 people.some of these people come in the first half of the month with mich welfare than the second half of the mont with a different states welfare, we have no way of turning most of these people in because theres no names when you do turn them in nothing is done.someone in the welfare admin or even several are most likely in cahoots because i've seen some people with 4 kids and they only get 41 or maybe 70 a month. iv'e persona... [ More ]

Reply #24

truecritic — Sun, 21 Feb 2010 15:12:49 GMT

Can you post some links that backup the amounts you have posted? I have NEVER seen anyone on welfare receive $42,000 per year - not even a woman with a baby. I am not aware of most welfare recipients even getting $10,000/yr. Some have several kids and I do not know what the maximum is for them. I can't keep up with everything Jennifer does, if you could point me to some links, I'd be interested.

I have seen more than one example of women playing the system - by going getting free food food fr... [ More ]

Reply #23

sully16 — Sun, 21 Feb 2010 14:29:51 GMT

our govenor keeps coming up with new ways to tax us , now it's going to be service taxes. dog groomer tax , lawn mowing tax...now the state is in the small business- business, they won't be happy until every mom and pop operation is kaput.yet if your on welfare here you can get 2000 cash 1500 for food thats 42,000 a year. for people who have never worked have no intentions of ever working, the unemployed here are suffering in the worst way. they are the homeowners who pay the property taxes that... [ More ]

Reply #22

LadyMylena — Sun, 21 Feb 2010 02:08:37 GMT

Bring it on! I'm ready with the problems that winning will bring, cuz I've had my FILL of the problems not winning has brought.

Reply #21

tiggs95 — Sat, 20 Feb 2010 23:18:46 GMT

Thanks for the info..I welcome this problem with open arms..

Reply #20

Ice Man — Sat, 20 Feb 2010 22:21:48 GMT

most of the lotteries have a clause that say even if you move within (example 5 years) of winning a major jackpot, you still owe taxes to original state on those annual payments. then after 5 years you can claim yourself a resident of said new state.

Reply #19

jwhou — Sat, 20 Feb 2010 20:53:01 GMT

That would just guarantee that you would pay the maximum amount of taxes. If you took the annuity and then moved to a tax friendly state, you can argue that your centers of interests had changed and you were no longer subject to Wisconsin state taxes on subsequent payments. You would still have to file but you may get more back from the state taxes as you would no longer be resident there.

In general, most lottery commissions will allow you to opt for the cash option at the point of claiming

Reply #18

markp1950 — Sat, 20 Feb 2010 11:21:34 GMT

OK, I live in Wisconsin, a big tax State.

I would take the Cash amount and move to Wyoming or South Dakota without a State income tax.

If I take the annuity I have to file with Wisconsin every year for the rest of my life.

Now, seeing that I want to give a large amount to charity anyway, could I say split my winnings between me for my part, and the other half to a new Charitable foundation?

MarkP

Reply #17

jwhou — Sat, 20 Feb 2010 08:32:29 GMT

You'll actually be better off being in the highest tax bracket each year as would be the case with the annuity because the way taxes work is that you get taxed at a certain rate for the first tax bracket worth of income that year, at the next tax bracket rate for the amount made between that first tax bracket limit and the next tax bracket limit and so on so each tax bracket is sort of an allowance that you can have taxed at the lower rates. If you took the whole jackpot in one year than you onl... [ More ]

Reply #16

LadyMylena — Sat, 20 Feb 2010 06:06:25 GMT

LMAO!!! That would be me! I'd definitely need a bigger mattress.

Reply #15

badboy00z — Sat, 20 Feb 2010 06:03:07 GMT

Maybe a biometric safe? Lol.

Reply #14

iGlenn — Sat, 20 Feb 2010 03:32:57 GMT

Correct. No earnings, no interest = No taxes

Where are you planning to put all that cash? I think you'll need a bigger mattress.

Reply #13

badboy00z — Fri, 19 Feb 2010 20:53:46 GMT

What I'm saying is you'll only be in the highest bracket only for the year that you win right? Say I win this year and when I file in 2011 I list the winnings and interest (if any) as income. If I am unemployed during 2011 and didn't earn interest, I wouldn't have to file in 2012.

Reply #12

sully16 — Fri, 19 Feb 2010 14:30:37 GMT

enough said

Reply #11

savagegoose — Fri, 19 Feb 2010 07:24:55 GMT

yeah tax advantage of the annuity, i never thought of that. also taking an annuity would gove you practice on living with new wealth. by time you've blown 10 years you might actually start figuring how to liven on the amount you have coming in, without blowing more than you can afford.

Reply #10

jwhou — Fri, 19 Feb 2010 06:59:07 GMT

Keep in mind that the tax bracket you'll be in will be much higher than 25% so the with holdings will not cover your taxes. You can be fairly certain that you will have to pay taxes and a lot of taxes at that.

The entire concept of taxation has traditionally been based on 50%. It's only legislative exceptions that makes the lowest tax bracket 17%. Even if the millions and millions that a jackpot win would be placed you in the 50% tax bracket, you would not be paying 50% just close to it becau... [ More ]

Reply #9

savagegoose — Fri, 19 Feb 2010 06:50:33 GMT

but it gives nice excuse for not giving any handouts sorry cant afford to give away money, i have a huuuuuge tax bill coming.

Reply #8

rdgrnr — Fri, 19 Feb 2010 06:44:23 GMT

High taxes stifle creativity, production, entreprenurial risk taking and everything else needed to excel or even compete in the world market.

We need tax cuts but we won't be getting any in the near future. In fact the current administration is going to let the Bush tax cuts expire, which in effect will be raising taxes. We're on the highway to hell til 2012. Buckle up, it's gonna be a rough ride.

Reply #7

ambelamba — Fri, 19 Feb 2010 06:32:59 GMT

I only have to pay federal tax. California doesn't charge state tax for lottery winnings.

Funny things is that the overall tax percentage for the United States is lower than other developed nations. Still, they charge higher tax for lotteries. In Europe, as you know, you don't pay tax for jackpot winnings.

Reply #6

rdgrnr — Fri, 19 Feb 2010 03:25:27 GMT

Better believe it.

Time for the slaves to revolt this comin November too.

Reply #5

Raven62 — Fri, 19 Feb 2010 03:21:11 GMT

It's a Myth: You're their Slave

Reply #4

Raven62 — Fri, 19 Feb 2010 03:17:57 GMT

People go to Tax Experts because they know the Tax Laws.

Reply #3

rdgrnr — Fri, 19 Feb 2010 03:09:07 GMT

I love how we've come to accept this robbery as part of life.

And from our employees no less.

Reply #2

Guru101 — Fri, 19 Feb 2010 00:55:47 GMT

I'd say at least 35%. It all depends on where you live and your current situation.

Reply #1

iGlenn — Fri, 19 Feb 2010 00:45:28 GMT

I believe the highest IRS tax rate is 35%. But you also can't forget the state and local taxes. When it's all said and done you can expect to pay 40-50% in taxes on your winnings.

You can do the tax paperwork yourself but you better make sure you know what your doing. Personally, I'd hire an accountant/tax attorney to complete my taxes. However, I'd still educate myself on the subject just to know how to figure out if I'm being taken advantage of

If you do it yourself you better make... [ More ]

Winning the Jackpot and taxes.

badboy00z — Thu, 18 Feb 2010 23:34:18 GMT

So what kind of taxes do you have to deal with after winning the jackpot? They already take 25% even before you get the money. As far as doing your tax return for the previous year you obviously have to list your initial winnings and any interest you earned as income. Say you are unemployed as well. My question is, would you get a refund or would you have to pay even more tax?? You will also be in the highest tax bracket for that year but will it go down for the next year? I guess that would dep... [ More ]