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Powerball Taxes

Topic closed. 1 reply. Last post 12 years ago by danisiri.

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United States
Member #247
April 15, 2002
6 Posts
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Posted: May 15, 2005, 1:58 am - IP Logged

In an OLD post I found reads...

 

"The next PowerBall drawing is for $83M, so 55% of that comes to $45.65M. Figure 32% of the remainder goes to state and federal coffers, and you still have $31,042,000.00 in cash. Invested at five percent, that will yield a gross annual income of $1,552,100.00. Now, however, you've satisfied the federal requirements for long-term capital gains, so your federal tax is capped at 15%. Even if your state tax is 8%, you'll still net nearly $1.2M a year from your investments."

 

Will somone explain the "You've satisfied the federal requirements for long-term capital gains, so your federal tax is capped at 15%."

Will all you interest earned off the lump sum  only be taxed at 15% instead of 35%?  Somone please explain this.

Thanks a lot 

    danisiri's avatar - Avatar all_for_Jesus.jpg

    United States
    Member #13684
    April 11, 2005
    77 Posts
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    Posted: May 15, 2005, 4:03 am - IP Logged

    I think the statement is a little misleading.  By my understanding, the 15% tax rate applies to capital gains seen on investments held over 366 days.  Any interest income (for example interest earned on a bond) is taxed as regular income at whatever tax bracket you fall into - unless of course you can keep your investments within those that are exempt from federal, state, and local tax, as well as the AMT (alternative minimum tax).  Many municipal bonds fall into this category, depending on what state you live in. 

    I found an interesting article on the capital gains tax on http://www.bankrate.com/brm/itax/tips/20010305a.asp.

    Good luck with your investments!