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Taxable Income - which year?

Topic closed. 10 replies. Last post 12 years ago by CASH Only.

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Jake649's avatar - scene sunovermountains.jpg

Canada
Member #2673
November 2, 2003
497 Posts
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Posted: December 6, 2004, 9:44 pm - IP Logged

Can someone point out where I can find an answer to the following question on the US IRS web site. I checked and could not find it.

If a person wins a taxable amount of money in a lottery in December but does not redeem the ticket until January, for which tax year is the money considered as income?

The year in which the draw is held or the year in which the ticket was redeemed?

Thanks,
Jake

    Stars's avatar - basket
    Englewood, NJ
    United States
    Member #1994
    August 5, 2003
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    Posted: December 6, 2004, 10:50 pm - IP Logged
    Quote: Originally posted by Jake649 on December 6, 2004

    Can someone point out where I can find an answer to the following question on the US IRS web site. I checked and could not find it.

    If a person wins a taxable amount of money in a lottery in December but does not redeem the ticket until January, for which tax year is the money considered as income?

    The year in which the draw is held or the year in which the ticket was redeemed?

    Thanks,

    Jake






    I'm no accountant or tax attorney, but I always thought the tax would be on the new year, or due in one years time (minus the 25% taken off right away.) It takes 4-6 weeks to get the bulk of the money anyways, so waiting to claim a few extra weeks should be no problem. I always thought that is what I will do because you can collect interest on the money for about a year and then pay the remainder of the tax due. The other advantage is that you have a years time to decide what charitable choices to make to lower your taxes instead of rushing to gain the advantages right now.



    This is why the universal advise to all jackpot winners is to seek professional advise before collecting any major prize. I always cringe when I read that somebody went to the the lottery headquarters within a few days of the drawing and winning...
      Todd's avatar - Cylon 2.gif
      Chief Bottle Washer
      New Jersey
      United States
      Member #1
      May 31, 2000
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      Posted: December 7, 2004, 12:28 am - IP Logged

      The year in which you redeemed the ticket, not the year you played.

       

      Check the State Lottery Report Card
      What grade did your lottery earn?

       

      Sign the Petition for True Lottery Drawings
      Help eliminate computerized drawings!

        four4me's avatar - gate1
        MD
        United States
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        June 18, 2003
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        Posted: December 7, 2004, 1:11 am - IP Logged

        I agree with Todd on this one. If i win this week on the 4 dig straight and win 10 grand or more i'll cash on ticket before the end of the year and one after the first of the year to break up the tax into two years.

          urbossmanpimpin's avatar - batman49
          Dallas, Texas
          United States
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          September 28, 2004
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          Posted: December 7, 2004, 1:25 am - IP Logged

          i agree with Todd also.

            Avatar
            USA
            United States
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            July 15, 2003
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            Posted: December 7, 2004, 8:43 am - IP Logged

            I would have to agree with Todd, it has to be the year you redeemed the ticket, you cannot pay taxes on money you have to receive. Tax years are based on past income, earnings, etc, not future or potential wealth.

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              Pa
              United States
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              October 9, 2003
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              Posted: December 7, 2004, 9:10 am - IP Logged

               When you redeem it you wait 6 to 8 weeks so it would fall 2005.Save your lossing tickets. you can take off up to your win.

                Jake649's avatar - scene sunovermountains.jpg

                Canada
                Member #2673
                November 2, 2003
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                Posted: December 7, 2004, 10:15 am - IP Logged

                I am claiming a small amount. It only takes one hour to receive the money from the time I present the ticket.

                Can anyone point me to the rule on the Internal Revenue Service web site. (www.irs.gov). I could not find it.

                Thanks,
                Jake

                  dclive's avatar - abstract

                  United States
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                  February 4, 2003
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                  Posted: December 7, 2004, 10:18 am - IP Logged

                  You pay taxes for the year in which you cash the ticket.  So if you cash ticket in Jan. you would not be liable for taxes until the following year. 

                  Jwtdc

                    whodeani's avatar - lightening

                    United States
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                    October 9, 2003
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                    Posted: December 7, 2004, 12:55 pm - IP Logged

                    I won $1100 on December 27th of last year (2003). I didn't claim it until January 2nd this year. I didn't receive W-2G form for that win this year. I will get it in January to pay 2004 taxes on it. You pay taxes on it the year you actually claim it, not when you win it. So if you were to win a taxable lottery win in the next couple of weeks, you could wait until after January 1st to claim it and not pay taxes on that win until April of 2006! If your win was fairly large, you could estimate the amount of taxes (minus what was is already withheld) and invest it for almost a year and half. Make money off of the government's money. How great is that???!!!


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                      Posted: December 7, 2004, 4:55 pm - IP Logged

                      Paying taxes on lottery winnings is not great.