When do the taxes officially hit you on a big win?

Reply #7

Justwinbaby — Sat, 22 Jan 2011 05:05:52 GMT

The lottery will subtract 25% for federal withholdings plus any applicable state tax depending on the state in question. Because it is $100 million, the winner of said prize would be responsible for 35% in federal taxes, meaning he or she would still owe the IRS the 10% that was not withheld from the winnings. However, because the earnings year would be 2011 since the prize was claimed in 2011, the remaining 10% would not be due until April 15, 2012.

Now let's complicate matters just a bit. L... [ More ]

Reply #6

Stack47 — Sat, 22 Jan 2011 02:44:36 GMT

Some say the drawing date is the determining factor but it's not income until the winner actually gets the money. State lotteries allow at least 6 months to cash a ticket so somebody winning in December could wait until after they filed their taxes on or before April 15. It's possible the winner may have not known they won; could they be penalized for ignorance?

There were drawings on December 31 and lottery offices weren't open until the January 2 at the earliest. Would the jackpot winnings... [ More ]

Reply #5

savagegoose — Fri, 21 Jan 2011 22:58:39 GMT

yeah in not to clear on the tax rules there. as in if its decided on when the moneys won, i have heard talk about postponing your claimn to get that extra tax year before paying up but not sure on how it was decided , maybe do a search.

Reply #4

TheOtherOne — Fri, 21 Jan 2011 22:50:00 GMT

yeah, they take a big chunk right away, but they have to have someone claim it before they can take that chunk, right?

And then after that they come back and take more taxes from the individual. I just wonder when they get it...I am guessing its after the person claims it.

Reply #3

temptustoo — Fri, 21 Jan 2011 21:57:02 GMT

win and then I will tell u

Reply #2

savagegoose — Fri, 21 Jan 2011 21:51:19 GMT

i think theytake a nice chunk out of the pile before you get to even see $1 from it, but then apparently you still will owe the taxman a fair chunk come tax time. on $100M win ts fair to say the top tax bracket so what ever is left over from the %25 take at payout. say %15 if top tax rate is %40

Reply #1

ressuccess — Fri, 21 Jan 2011 20:30:11 GMT

When somebody wins the jackpot, their taxes would be only one time if they take the cash option. If they take annual payments, tax will occur once a year if they step forward right away.

When do the taxes officially hit you on a big win?

TheOtherOne — Fri, 21 Jan 2011 16:55:47 GMT

Let's say someone wins a large jackpot of $100 Million on December 15, 2010. however they do not *claim* the winnings until January 15, 2011.

At tax time, would this person owe the taxes from the winning when they do their taxes the following January/February of 2011

OR

would the taxes not hit until 2012, based on the person claiming the win in 2011