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Warning to big winners:

Topic closed. 11 replies. Last post 11 years ago by theladydi.

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Australia
Member #17096
June 11, 2005
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Posted: January 25, 2006, 6:02 am - IP Logged

Even if you give it all away to charity, you will still owe taxes.


Contrary to what you might have heard, there is no way to avoid paying taxes on lottery money when you win a big jackpot.
Even if you give it all away to charity, you will still owe some taxes. In any state or jurisdiction in which lotteries are legal, the government takes its 28 percent off the top. Most lotteries leaves it up to the individual to pay the local taxes.

Example: If a player wins $100,000, the prize after federal taxes is $72,000.

When you give money to a qualified charity, you get a deduction, but it is not worth the full amount of the gift. So before you decide to give it away, make sure you will still have enough to pay the remaining tax.

The real story is when you receive your money, 28 percent will be withheld for federal income taxes. Most states have their own taxes to collect. Since you might owe additional taxes, you should meet with a specialist to find out how much more you owe, if anything.

Your accountant can arrange quarterly tax payments, and tell you how much you owe each year (the amount can fluctuate).

If you receive your money in annual payments you need to set the money aside for the necessary quarterly payments. Setting it aside means putting it into a money market account or other very conservative, interest paying investment. The monthly interest on a large amount of money will add up. If you were to pay the tax before it was due just to get it taken care of, you would lose the interest it could have been earning for you.

My best advice is to see a licensed financial planner and a lawyer right after winning your jackpot. If you win, it's never too early to begin planning for taxes. Then enjoy your winnings.


    United States
    Member #17555
    June 22, 2005
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    Posted: January 25, 2006, 6:12 am - IP Logged

    If I won a major jackpot and gave it all away, I'd have my head examined by a very experienced brain surgeon. Then I would jump off a very high cliff, while thinking about elephant eyebrows, and how nice they are.

    I say, good show.

      Raven62's avatar - binary
      New Jersey
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      June 28, 2005
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      Posted: January 25, 2006, 6:22 am - IP Logged

      Give the Ticket to the Charity and let them Cash It In.

       

        Todd's avatar - Cylon 2.gif
        Chief Bottle Washer
        New Jersey
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        Posted: January 25, 2006, 6:31 am - IP Logged

        goldrush:

        I do not agree.  What is the source of your information?

         

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

         

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

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          Morrison, IL
          United States
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          May 13, 2004
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          Posted: January 25, 2006, 11:59 am - IP Logged

          Give the Ticket to the Charity and let them Cash It In.

           

          lol

            Coin Toss's avatar - shape barbed.jpg
            Zeta Reticuli Star System
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            Posted: January 25, 2006, 5:28 pm - IP Logged

            There's a book, What to Do When You Win the Lottery, it's not about systems or nuymber selctions at all, it's only about coming in to such a windfall. In the book the author gives an example of setting up a trust to a charity as oppossed to a flat out contribution.

            One winner in the example gave $100,000 a year, the other set up a $100,000 trust. The one who set up the trust got more tax benefit over the same course of time.  

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              United States
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              Posted: January 25, 2006, 5:54 pm - IP Logged

              I disagree with gold rush also on the tax issues.  And, I don't see why people complain about taxes.  Just consider the amount you won, is the amount you would come to after calculating what your amount would be after the taxes are taken out, so you don't feel like anything is being "taken" away.  If you win 1 million, and you only get $700k after taxes....WHAT are you complaining about?  You just made $700k!!! lol.

               

              And, I would not give a dime to a charity....atleast not that much.

               

              You'd have to be one naive pup to believe that any reasonable amount given to the charity actually does not just goes into the charitie's profit for running the organization.

               

              :)


                United States
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                Posted: January 25, 2006, 6:03 pm - IP Logged

                Everyone, I haven't won the jackpot yet in MM and/or CA SLP. However, if I ever win a big prize, I would pay the federal and sales tax first. Afterwards, I have made my money [profit] and can spend on anything.

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                  Sparta, NJ
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                  Posted: January 25, 2006, 6:52 pm - IP Logged

                  Worry about falling down and breaking your neck before you get a chance to pay the taxes, not the taxes!   Worry about waking up from a night of drinking and the woman next to you tells you her name is Lorna Bobbett.  If you win one of the multi-million jackpots, taxes should be at the bottom of your list of complaints. 

                  Cheers

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

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

                    dvdiva's avatar - 8ball

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                    Posted: January 26, 2006, 12:16 am - IP Logged

                    I don't see what the big rush is on taxes if you win. Most people can operate a telephone book. Look under tax lawyer or tax attorney. That's it. Hire two just in case.

                      justxploring's avatar - villiarna
                      Wandering Aimlessly
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                      Posted: January 26, 2006, 2:05 am - IP Logged

                      GOLDRUSH- sorry, but even before I read the other comments, I disagreed with your post.  You can use google or go directly to the IRS site for specific rules on tax free gifts and charitable donations.

                      To those people who say they wouldn't give anything to charity, shame on you!  I hope you're all kidding around. I might not trust a large national organization because of recent scandals and big salaries and operating costs, but I'd definitely give a portion to help people and animals in need.  What good is money if you can't share it?  Family first of course, but living well without giving back is a terrible example to teach our children.

                       "No one has a right to consume happiness without producing it."

                      Helen Keller said that and she was born blind, deaf and mute.  I always think of her when I'm very sad about my life to put things into perspective.

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                        New Member
                        Brunswick Georgia, 31525
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                        Posted: January 27, 2006, 4:09 pm - IP Logged

                        I think there ought to be a new lotto game, and it should be called "Multi-Million Dollar Winners".

                            Say for instance you have a jackpot of $50 million dollars.  In this game, you will have 50 drawings of that particular game.  In essence, you should have 50 $1 million dollar winners. If there are not 50 winners (say there are only 25 winners) for that drawing, then the remaining $25 million should go toward the next draw date.

                            The reason for doing this, is so that you generate more people playing and winning money.  The more money distributed the more players. This not only helps more people to create excitement for the game, but money distibuted amongst alot of people will help the economy in so many way...including taxes.

                            What does everyone else think?  Would you be enticed to play a game where there are money chances of becoming a millionaire?????  I would!!!!!!!!