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lottery taxes

Topic closed. 52 replies. Last post 11 years ago by Chewie.

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Los Angeles County, CA
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Posted: November 15, 2005, 1:27 pm - IP Logged
“Interesting post - especially for the first time.”

Thanks. 

 

The time available (restraints) to collect the winnings seem have an enormous bearing on the tax issue, and the basic Constructive Receipt mentality.  Under normal circumstances, it would appear, you pay in the year won.  However, should that timeline be unreasonable, your tax base is the following year.  The law is one thing, the ruling of the court trumps the law.”

Sounds logical, however, would this court ruling, which occurred before 1998, still have any weight since the laws changed and new laws became effective October 21, 1998.

 

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    Sparta, NJ
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    Posted: November 15, 2005, 1:34 pm - IP Logged
    “Interesting post - especially for the first time.”

    Thanks. 

     

    The time available (restraints) to collect the winnings seem have an enormous bearing on the tax issue, and the basic Constructive Receipt mentality.  Under normal circumstances, it would appear, you pay in the year won.  However, should that timeline be unreasonable, your tax base is the following year.  The law is one thing, the ruling of the court trumps the law.”

    Sounds logical, however, would this court ruling, which occurred before 1998, still have any weight since the laws changed and new laws became effective October 21, 1998.

     

    Then the courts over rule them again.  Thats why America has a Constitution.  To protect us from lawmakers.  The courts will always have the upper hand.

    Cheers

    |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

    I only trust myself - and that's a questionable choice

      pigsNtrees's avatar - pigsNtrees
      Mallorn trees of Lothlorien
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      Posted: November 15, 2005, 1:34 pm - IP Logged

      Good lord this makes my head spin ala Linda Blair. Have we came to an consensus on this yet?

      Quando Porca Volare!

      drunk hobbit

        BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
        Magnolia, Delaware
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        Posted: November 15, 2005, 1:35 pm - IP Logged

        The statement that "the law is one thing, the ruling of the court trumps the law" still holds true today, even with the new laws of 10-21-98! Court rulings will always trump the law, unless it's ruling is shown or proved to be unconstitutional, then the law on the books will prevail!

        Keep dreaming the impossible dream, it just may come true! Thumbs Up

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          Sparta, NJ
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          Posted: November 15, 2005, 1:36 pm - IP Logged

          Naw.  No one will every give up.  Just change the rules, and start again.  Same question, rephrased.  Same answer regardless.

          Cheers

          |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

          I only trust myself - and that's a questionable choice

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            Louisville, KY
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            Posted: November 15, 2005, 1:38 pm - IP Logged

            Good lord this makes my head spin ala Linda Blair. Have we came to an consensus on this yet?

            Only the lord knows... IRS publication 17 is my friend, and that is what I have been consulting all through this topic. My theory, which I stated before, is "You are taxed on all income in the year you receive it, whether actively or constructively." I remain behind my position from earlier... the simplest one. Claim in 2005, pay in 2005... Claim in 2006, pay in 2006. I'm not budging from this because it makes no sense to pay a tax on income you have not yet received!

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              Sparta, NJ
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              Posted: November 15, 2005, 1:52 pm - IP Logged

              Good lord this makes my head spin ala Linda Blair. Have we came to an consensus on this yet?

              Only the lord knows... IRS publication 17 is my friend, and that is what I have been consulting all through this topic. My theory, which I stated before, is "You are taxed on all income in the year you receive it, whether actively or constructively." I remain behind my position from earlier... the simplest one. Claim in 2005, pay in 2005... Claim in 2006, pay in 2006. I'm not budging from this because it makes no sense to pay a tax on income you have not yet received!

              When you win, let everyone know the answer the IRS - and subsequent court ruling is.  Until then, its like trying to find a heart for the tin man.

              Cheers

              |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

              I only trust myself - and that's a questionable choice

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                Louisville, KY
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                Posted: November 15, 2005, 1:57 pm - IP Logged

                Good lord this makes my head spin ala Linda Blair. Have we came to an consensus on this yet?

                Only the lord knows... IRS publication 17 is my friend, and that is what I have been consulting all through this topic. My theory, which I stated before, is "You are taxed on all income in the year you receive it, whether actively or constructively." I remain behind my position from earlier... the simplest one. Claim in 2005, pay in 2005... Claim in 2006, pay in 2006. I'm not budging from this because it makes no sense to pay a tax on income you have not yet received!

                When you win, let everyone know the answer the IRS - and subsequent court ruling is.  Until then, its like trying to find a heart for the tin man.

                This I will do... and finally give my brain a much-needed rest.

                  BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
                  Magnolia, Delaware
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                  Posted: November 15, 2005, 2:05 pm - IP Logged

                  When you win, let everyone know the answer the IRS - and subsequent court ruling is.  Until then, its like trying to find a heart for the tin man.

                  I Agree!

                  Besides, it depends on the judge and how he thinks the law should be applied to that particular case! The constructive receipt doctrine has been applied in other contexts with respect to lottery prize winners!

                  Keep dreaming the impossible dream, it just may come true! Thumbs Up

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                    Louisville, KY
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                    Posted: November 15, 2005, 2:12 pm - IP Logged

                    Barista:

                    I was in a bad mood the other day.. please excuse the shouting.... sorry.

                    My point I am trying to make about the double-taxing issue is why would you be taxed on $315M in 2 different tax years? It seems like from that, the way I am understanding it, you would end up paying taxes twice... once in 2005 from when you won, and once again in 2006 when you claimed it. It just doesn't make sense that Uncle Sam would say "Congratulations! Now give me my share twice!" Please help me to understand your view.

                      BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
                      Magnolia, Delaware
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                      Posted: November 15, 2005, 2:29 pm - IP Logged

                      OK NoCompLotto here it is, You go to the lottery headquarters in 2005 to turn your winning ticket in (right). They make sure it is authentic, you get your lump sum check minus the Fed taxes (right). And the amount they took from said check is 25% (right). Now when you file your taxes in April of 2006 for the tax year of 2005 your going to have to make up the difference of the 13% they didn't take when you received your lump sum check in 2005! Any winner of the lottery is put in the highest tax bracket (38%) for the first year of winning the lottery! Does this explain it ? I hope it does.

                      The next year (2006) they best be doing something (like giving to charity) to lower their tax rate or something as not to be paying such a high tax bill!

                      Keep dreaming the impossible dream, it just may come true! Thumbs Up

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                        Louisville, KY
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                        Posted: November 15, 2005, 2:32 pm - IP Logged
                        OK, well that I understand... I knew that you would have to make up the extra 13%, I just thought you were saying something like you were going to be taxed twice (at the full amount) on the same JP amount in both years. TYVM for clearing it up. But isn't there a way that when you claim the prize, you can tell them to take out the extra 13% right then and there so you wouldn't have to pay it later? I thought you could, since you can do that at most employers. You can tell them to withhold an additional amount per week to satisfy your tax burden at the end of the year. If you can do this at an employer, why not the lottery?
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                          Greenwich, CT
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                          Posted: November 15, 2005, 2:47 pm - IP Logged

                          The highest tax bracket is currently 35%.  It was lowered from 38% a few years ago.

                          Hold on to your money as long as you can!  Don't have them take it right away.  Let yourself earn interest until April, not the government!

                            dvdiva's avatar - 8ball

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                            Posted: November 15, 2005, 2:48 pm - IP Logged

                            OK NoCompLotto here it is, You go to the lottery headquarters in 2005 to turn your winning ticket in (right). They make sure it is authentic, you get your lump sum check minus the Fed taxes (right). And the amount they took from said check is 25% (right). Now when you file your taxes in April of 2006 for the tax year of 2005 your going to have to make up the difference of the 13% they didn't take when you received your lump sum check in 2005! Any winner of the lottery is put in the highest tax bracket (38%) for the first year of winning the lottery! Does this explain it ? I hope it does.

                            The next year (2006) they best be doing something (like giving to charity) to lower their tax rate or something as not to be paying such a high tax bill!

                            For the current MM game why file taxes in April for a check recevied in January? It doesn't matter what year it was withheld. It mattered when you get the cash. Since it will take 60 days to recieve the cash any drawing (multistate) in the last 60 days of the year means it would be taxed on the next year since you don't have the cash.

                            Also the highest bracket is 35%.

                            If you are talking about the Powerball winners since they could have had the cash if they didn't delay turning in  the ticket the IRS could easily go after them if they don't declare the money for 2005. For the current MM game however there would be no way to get the money this year even if you want it. So you get to pay taxes on it in 2007 for the 2006 tax year.

                              BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
                              Magnolia, Delaware
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                              Posted: November 15, 2005, 2:49 pm - IP Logged

                              Employers you can that with by having them take an extra 5, 10, 15 bucks out of every check or even more as not to have to pay at the end of the year! But if your employer is withholding to much and you are getting 200 or more back (2 years in a row) in the form of a refund the U.S. Treasury always puts a note in with your refund check asking you to have your employer to make changes to how they calculate your withholding!

                              Now with that said let me tell you what a dear friend asked me one year (many years ago). BTW he was an accountants husband! He asked me, why are you giving the government an interest free loan for? I looked at him like he had three heads or something and said "What are you talking about!" He then told me, it's not good to be getting the 900.00 dollar refunds that I had been getting for the last 4 years! I asked why, he said all your doing is giving the Government an interest free loan and also if the dollar has lost it's buying power (inflation as it's called) by the time you received your refund check, you have actually lost money in more ways than one! He's right! It's better to pay Uncle Sam a few hundred (200.00 no more than that) every year than to get back a refund for 500.00 or more every year!

                              Keep dreaming the impossible dream, it just may come true! Thumbs Up