|Posted: December 29, 2008, 11:33 am - IP Logged|
Hi all! This is my first post (although long time lurker). I'm a life long Floridian (currently in Central Florida) and long time lottery player. My biggest win to date is $100 from a scratch off.
I've got a question on the taxes that are paid from the taxable winnings. This question is particularly for Florida, but I'm interested in how it is in different places too. I've never really gotten a clear answer on this. So let's take $100,000 just for an example. The Florida Lottery web page FAQ says that the IRS requires the Florida Lottery to withhold 25 percent tax from prizes greater than $5,000, so if you win $100,000, $25,000 will be withheld, making your prize $75,000. And what happens then? Is that money added to your income for the year?
So if you make $100,000 per year and have no other income, you pay %25 taxes (married filing jointly)...but when you add your $75,000 in winnings, then you are taxed at %28? I guess I'm confused on how all that works? Thanks for any clarifications.