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State Tax Question

Topic closed. 5 replies. Last post 12 years ago by TheGameGrl.

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sirius's avatar - octa feathers.jpg
Thread Starter
United States
Member #17717
June 25, 2005
60 Posts
Posted: July 19, 2005, 9:35 pm - IP Logged

Let's say I live in a state which skims some of the jackpot winnings into its own coffers by way of state taxes and I hit 'the big one'...  is it reasonable to change my place of residence to a nearby state which has no state taxes prior to my claiming the winnings?  Thoughts? Pros or cons?

    SirMetro's avatar - center
    East of Atlanta
    United States
    Member #6191
    August 11, 2004
    1389 Posts
    Posted: July 19, 2005, 10:02 pm - IP Logged

    As I understand the rules, no, it would be of no benefit.

    First, it would be considered Tax Evasion, which comes with some pretty stiff penalties.

    Second, as I understand it, each State that participates within the multi-state lotteries already have prearranged aggreements as to who gets what and how much, no matter what.

    Third, as I understand it, the State the Ticket was purchased in is the state who is responsible for collection and payouts. And I think they could care less where your current (or future) residence is, they will get their cut before you see the check.

    And Finally, if you should win a substantial pot to which this is an issue for you, I highly suggest you form a team of advisors consisting of a Tax advisor, an Accountant and a financial specialist Lawyer. This is assuming you feel you need assistance in protecting your newly found assets.

    These are just my opinions, hope you do hit it big enough that you require such assistance.

    Sir Metro

      United States
      Member #1424
      April 25, 2003
      696 Posts
      Posted: July 19, 2005, 10:07 pm - IP Logged

      Anything to avoid the clutches of the greedy bureaucrats would be considered a revolutionary act!

      Orangeman                            Cool

        RJOh's avatar - chipmunk
        United States
        Member #9
        March 24, 2001
        20022 Posts
        Posted: July 19, 2005, 10:54 pm - IP Logged

        If your winnings are from a lottery ticket bought in Ohio then you pay Ohio states taxes regardless of where you live.  I think all states work the some way.  If you don't want to pay state taxes on your lottery winnings then buy your tickets in a state that doesn't have state taxes and move before you win.


         * you don't need to buy more tickets, just buy a winning ticket * 
                     Evil Looking       

          hosni's avatar - hosni
          Escondido, CA
          United States
          Member #70
          December 31, 2001
          13076 Posts
          Posted: July 19, 2005, 11:32 pm - IP Logged

          Just my 2 centavos worth. CA residents do not pay CA income tax on CA lottery winnings. We are only responsible to IRS. However, if I won a lottery in Arizona, I would have to pay CA income tax and maybe even AZ tax.

          Retired Grumman Aerospace Corporation F-14 Tomcat AVIONICS Field Engineer Extraordinaire

            TheGameGrl's avatar - character catafly.jpg
            A long and winding road
            United States
            Member #17084
            June 10, 2005
            4747 Posts
            Posted: July 20, 2005, 7:55 pm - IP Logged

            PA is another state that applies the exemption rule :)

            As for my lovely neighbor state Maryland- they tax at all levels and take out the taxes due prior to issuing the winning. So state,federal, and county are each pre-taxed.  Thus why when I play the MM from there I have to realize my winnings are taxed around 40% ( 35% federal, 4% state and 1-2% county) . I personally think they should let the person invest the tax the first year and then pay at years end.

            As  someone mentioned- its not the state you reside but the state the ticket was purchased and claimed that decides its tax clause.  Most states even tell you that on Multi state draws you can only claim it in the state it was purchased.

            ~~Give Freely and Blessings will Come..:1116,666x,2226,000,0841