Why can't you claim lotto winnings as investment income

Reply #8

Six balls — Fri, 17 May 2013 16:17:00 GMT

And this, kids, is why all the What to Do If You Win the Ginormous Jackpot! advice columns tell you to get the advice of tax attorneys/CPAs, as opposed to internet code monkeys. Too much math

Reply #7

whiteballz — Fri, 17 May 2013 15:15:39 GMT

ohhhhh snip

Reply #6

Jill34786 — Fri, 17 May 2013 14:43:18 GMT

The new tax structure for 2013 is still quite vague. There have been numerous reports stating that the 3.8% Obamacare tax will apply to both unearned/investment income as well as earned income. The link below states that the 3.8% tax applies to investment/unearned income and that a 2.35% Medicare Part A tax applies to earned income with 200k/single or 250k/married being the basis.

Either way, large lottery winnings which are classified as earned income will be subject to a 39.6% Federal tax a... [ More ]

Reply #5

whiteballz — Fri, 17 May 2013 12:53:13 GMT

this is accurate for the most part. One correction I would add is the long term capital gains tax rate is no longer 15% starting Jan 2013. There is a new 3.8 percent surtax on investment income to help fund obamacare. This effects households making at least $250,000 ($200,000 single). The 3.8 percent surtax in addition to the expiration of the Bush era tax cuts would result in a 23.8% long term capital gains tax rate.

http://swampland.time.com/2012/12/07/5-new-obamacare-taxes-coming-in-2013

Reply #4

Poo Nanny — Fri, 17 May 2013 05:26:39 GMT

That great! Maybe I am.

Reply #3

Six balls — Fri, 17 May 2013 04:47:53 GMT

Because it's not a long term capital gain. Buy a stock today, have it go up $1000 and sell it next week, it's taxed the same as money earned by working (between 10% and 39.6%). Buy the same stock today, hold it for ovar a year and it's gone up the same $1000, you're taxed at the 10-15% capital gains rate.

Course, if you buy a lottery ticket and hold onto it for a year, it's going to be worthless when you try to cash it in. Welp, that's one way to reduce your tax burden.... [ More ]

Reply #2

rdgrnr — Fri, 17 May 2013 04:22:42 GMT

Hi Poo Nanny.

Are you related to Pee Diddy

Reply #1

Stack47 — Fri, 17 May 2013 02:46:43 GMT

Because the IRS defines lottery winnings as certain gambling winnings. And considering the fact about 97% of the tickets win nothing, it can hardly be called even a possible investment.

The good news is you can deduct your losing tickets up to how much you win.

Why can't you claim lotto winnings as investment income

Poo Nanny — Fri, 17 May 2013 02:10:45 GMT

When I buy my tickets, I think of it as a possible investment in my future. Kind of like buying a risky stock. Why can't I claim my winnings as investment income which would be taxed at a lower percentage