Avoiding State tax on Megamillions winnings.

Reply #14

Stack47 — Wed, 02 Oct 2013 12:15:47 GMT

It is an interesting scenario if there is no PA residency requirements on the date the ticket was sold. It's really similar to the question of winning in December and waiting until January to collect the winnings. In which year will the winnings be taxable income?

If you have a system you believe will eventually win the jackpot, it makes sense to buy the tickets in a state with no state taxes on lottery winning or in a state that allows claiming the winnings anonymously. If you're buying QPs,... [ More ]

Reply #13

Toronto — Wed, 02 Oct 2013 05:36:25 GMT

OK Nevermind, annuities are handled through a 3rd party company

Reply #12

EdG1955 — Wed, 02 Oct 2013 05:09:55 GMT

You have to choose cash or annuity within a fixed time (60 days?) so waiting 6+ months to claim means you will only have the annuity option. But if taxes are your main concern, taking the annuity and then moving to an income tax-free state would mean you only paid state tax on the first payment.

Reply #11

Toronto — Wed, 02 Oct 2013 04:47:10 GMT

I'm pretty sure you can use cash or accrual based accounting for income taxes. Some accountant please chime in.

My belief, if you can use cash-basis: If you live in VA for 6+ months in 2013 and you cash it in 2013, then you will have to pay VA taxes and file 2 taxes (PA VA) NO MATTER WHAT. Also note, I believe that PA's no-tax on lottery winnings is only for in-state residents - you have to pay a rate to PA if you're from out-of-state.

Now maybe it's possible to move to PA at the start of... [ More ]

Reply #10

Coin Toss — Wed, 02 Oct 2013 04:38:18 GMT

Artist77,

You once mentioned a proposed book by jackpot winners about how people had hit them up for $$$ would be interesting.

I think another would be How Lottery Winners Tried To Beat The tax Man .

Chapter 1, by Joe Jones,

#235764, Federal Pen. Atlanta

rgpark,

Something to consider - if an American wins a Canadian lottery they still have to pay U.S. taxes on the winnings.

When the Irish Sweepstakes was going on althought it was illegal to buy a ticket if you won U... [ More ]

Reply #9

rgrpark — Wed, 02 Oct 2013 01:30:02 GMT

From the USA MEGA FAQ:

One other option to consider, depending on how much in taxes you're looking to save: the residency requirements as they relate to prize claims, state taxes, and income reporting. Since you aren't responsible for paying taxes until you claim the prize, perhaps there is time to establish residency in the state where you purchased the ticket before the prize claim period expires. However, that is something you would definitely need to explore with an attorney before takin... [ More ]

Reply #8

bigbear29 — Wed, 02 Oct 2013 00:52:08 GMT

If it's the jackpot say, MM or PB, I would just pay the state taxes and somewhere that you really would like to live.

Reply #7

Stack47 — Wed, 02 Oct 2013 00:47:07 GMT

Residences of other states with state taxes that work in a state with no state taxes still must pay state taxes on their income in the state of residence. It's possible someone could get away with paying no state taxes on a prize under $5000, but a multi-million jackpot is a whole different ball game.

Reply #6

grwurston — Tue, 01 Oct 2013 23:48:28 GMT

Click on USA MEGA on the left side, then go to the FAQ'S. They will answer your questions there. (You will still pay taxes in Va.

Reply #5

Artist77 — Tue, 01 Oct 2013 23:35:23 GMT

Amen. Perfect answer. Per the IRS 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.

Reply #4

Coin Toss — Tue, 01 Oct 2013 23:31:54 GMT

rgpark,

Everything noise-gate said above and don't forget the ticket has a date on it.

Reply #3

noise-gate — Tue, 01 Oct 2013 23:27:46 GMT

Interesting theory you have going on rgrpark BUT the States have already gone through this rehearsal, your driver's license lets them know whether you were a State resident at the time of your winnings. There is no getting away with not paying State taxes if you were living there at the time.Much like being seperated from your spouse and you won the lottery, just because you were not together at the time of your win does not mean you do not have to share half or a percentage of the winnings.... [ More ]

Reply #2

rgrpark — Tue, 01 Oct 2013 22:51:49 GMT

I've moved a few times in the middle of the year. You just have to fill out two separate State tax forms. You will also have two W-2s for the two states.

Each state has different requirements, but usually you're good to go if you have a residence and have their Driver's license.

By the time I claim the winning, I would comfortably be a resident in that state.

Reply #1

billionaire2bee — Tue, 01 Oct 2013 22:34:55 GMT

Interesting concept...when does a particular state consider you a resident though? Also if you pay your year end taxes in the one state and it's not time for you to pay them again til the next fiscal will they consider the actual state you paid your year end taxes in you actual state of residence

Avoiding State tax on Megamillions winnings.

rgrpark — Tue, 01 Oct 2013 21:40:01 GMT

Ok I live in VA where there is a 4% state tax on lottery winnings.

I drove through and purchased a ticket in PA where there is NO state tax on lotto winnings.

If I win, I have one year to claim the ticket in PA.

If I win, can i just move to PA, live there and be a resident, then claim the ticket after about 6 months?

I would think I would be a full PA resident and the winnings would be PA income, thus not subject to any state tax.

Any problems with this logic