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Winning the Jackpot and taxes.

Topic closed. 52 replies. Last post 7 years ago by joshuacloak.

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CA
United States
Member #84266
December 26, 2009
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Posted: February 18, 2010, 6:34 pm - IP Logged

So what kind of taxes do you have to deal with after winning the jackpot? They already take 25% even before you get the money. As far as doing your tax return for the previous year you obviously have to list your initial winnings and any interest you earned as income. Say you are unemployed as well. My question is, would you get a refund or would you have to pay even more tax?? You will also be in the highest tax bracket for that year but will it go down for the next year? I guess that would depend on how much interest you earned for the next year?

The lottery will send you a W2 right?

If you are good with numbers do you really need a tax expert/ CPA?

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    Posted: February 18, 2010, 7:45 pm - IP Logged

    I believe the highest IRS tax rate is 35%.  But you also can't forget the state and local taxes.  When it's all said and done you can expect to pay 40-50% in taxes on your winnings.  

    You can do the tax paperwork yourself but you better make sure you know what your doing.  Personally, I'd hire an accountant/tax attorney to complete my taxes.  However, I'd still educate myself on the subject just to know how to figure out if I'm being taken advantage of

     

    If you do it yourself you better make sure you know what your doing.

      Guru101's avatar - rw6jhh
      Indiana
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      January 7, 2007
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      Posted: February 18, 2010, 7:55 pm - IP Logged

      I believe the highest IRS tax rate is 35%.  But you also can't forget the state and local taxes.  When it's all said and done you can expect to pay 40-50% in taxes on your winnings.  

      You can do the tax paperwork yourself but you better make sure you know what your doing.  Personally, I'd hire an accountant/tax attorney to complete my taxes.  However, I'd still educate myself on the subject just to know how to figure out if I'm being taken advantage of

       

      If you do it yourself you better make sure you know what your doing.

      I'd say at least 35%. It all depends on where you live and your current situation.

      Gonna win.Big Smile

        rdgrnr's avatar - walt
        Way back up in them dadgum hills, son!
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        Posted: February 18, 2010, 10:09 pm - IP Logged

        I love how we've come to accept this robbery as part of life.

        And from our employees no less.


                                                     
                             
                                                 

         

         

         

         

                                                                                                           

        "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                    --Edmund Burke

         

         

          Raven62's avatar - binary
          New Jersey
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          June 28, 2005
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          Posted: February 18, 2010, 10:17 pm - IP Logged

          So what kind of taxes do you have to deal with after winning the jackpot? They already take 25% even before you get the money. As far as doing your tax return for the previous year you obviously have to list your initial winnings and any interest you earned as income. Say you are unemployed as well. My question is, would you get a refund or would you have to pay even more tax?? You will also be in the highest tax bracket for that year but will it go down for the next year? I guess that would depend on how much interest you earned for the next year?

          The lottery will send you a W2 right?

          If you are good with numbers do you really need a tax expert/ CPA?

          People go to Tax Experts because they know the Tax Laws.

          A mind once stretched by a new idea never returns to its original dimensions!

            Raven62's avatar - binary
            New Jersey
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            Posted: February 18, 2010, 10:21 pm - IP Logged

            I love how we've come to accept this robbery as part of life.

            And from our employees no less.

            It's a Myth: You're their Slave!

            A mind once stretched by a new idea never returns to its original dimensions!

              rdgrnr's avatar - walt
              Way back up in them dadgum hills, son!
              United States
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              April 28, 2009
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              Posted: February 18, 2010, 10:25 pm - IP Logged

              It's a Myth: You're their Slave!

              Better believe it.

              Time for the slaves to revolt this comin November too.


                                                           
                                   
                                                       

               

               

               

               

                                                                                                                 

              "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                          --Edmund Burke

               

               

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                Entertaiment Capital
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                Posted: February 19, 2010, 1:32 am - IP Logged

                 I only have to pay federal tax. California doesn't charge state tax for lottery winnings.

                 Funny things is that the overall tax percentage for the United States is lower than other developed nations. Still, they charge higher tax for lotteries. In Europe, as you know, you don't pay tax for jackpot winnings.

                  rdgrnr's avatar - walt
                  Way back up in them dadgum hills, son!
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                  Posted: February 19, 2010, 1:44 am - IP Logged

                   I only have to pay federal tax. California doesn't charge state tax for lottery winnings.

                   Funny things is that the overall tax percentage for the United States is lower than other developed nations. Still, they charge higher tax for lotteries. In Europe, as you know, you don't pay tax for jackpot winnings.

                  High taxes stifle creativity, production, entreprenurial risk taking and everything else needed to excel or even compete in the world market.

                  We need tax cuts but we won't be getting any in the near future. In fact the current administration is going to let the Bush tax cuts expire, which in effect will be raising taxes. We're on the highway to hell til 2012. Buckle up, it's gonna be a rough ride.


                                                               
                                       
                                                           

                   

                   

                   

                   

                                                                                                                     

                  "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                              --Edmund Burke

                   

                   

                    savagegoose's avatar - ProfilePho
                    adelaide sa
                    Australia
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                    April 11, 2006
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                    Posted: February 19, 2010, 1:50 am - IP Logged

                    but it gives  nice excuse for not giving any handouts " sorry cant afford to give away money, i have a huuuuuge tax bill coming. "

                    2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

                    keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

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                      Posted: February 19, 2010, 1:59 am - IP Logged

                      So what kind of taxes do you have to deal with after winning the jackpot? They already take 25% even before you get the money. As far as doing your tax return for the previous year you obviously have to list your initial winnings and any interest you earned as income. Say you are unemployed as well. My question is, would you get a refund or would you have to pay even more tax?? You will also be in the highest tax bracket for that year but will it go down for the next year? I guess that would depend on how much interest you earned for the next year?

                      The lottery will send you a W2 right?

                      If you are good with numbers do you really need a tax expert/ CPA?

                      Keep in mind that the tax bracket you'll be in will be much higher than 25% so the with holdings will not cover your taxes.   You can be fairly certain that you will have to pay taxes and a lot of taxes at that.

                      The entire concept of taxation has traditionally been based on 50%.   It's only legislative exceptions that makes the lowest tax bracket 17%.   Even if the millions and millions that a jackpot win would be placed you in the 50% tax bracket, you would not be paying 50% just close to it because you would still be paying only 17% for the first tax bracket and so on up to the top tax bracket.   The tax bracket is simply the marginal tax rate on which your next dollar is to be taxed at.

                      If you take a good hard look at the tax implication than a cash value option is pretty much the wrong way to take a jackpot prize.   An annuity is essentially a tax deferred investment at about 5% interest rate which may not seem like much but with money like that, you won't have very many options at getting tax deferred investments and after tax investments will have to do much better than 5% in order to match tax deferred growth, also by spreading out the tax load over multiple years you get the advantage of the lower tax brackets each year even though each year's income is enough to still put you into the top tax bracket.   Besides, if you choose the annuity, you can still change your mind and take the cash value option in most cases but not vice versa so when you buy a ticket, you should always select the annual payments even if you think you may want the money up front.

                      They give you a W2-G with the check, it's actually printed on the same sheet of paper as the check and you just detach the check from the W2-G.   I've only won $1,000 but I've kept a scanned image of the W2-G and the check, I'm planning on framing a scan of the check.

                        savagegoose's avatar - ProfilePho
                        adelaide sa
                        Australia
                        Member #37136
                        April 11, 2006
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                        Posted: February 19, 2010, 2:24 am - IP Logged

                        yeah tax advantage of the annuity, i never thought of that. also taking an annuity would gove you practice on living with new wealth. by time you've blown 10 years you might actually start figuring how to liven on the amount you have coming in, without blowing more than you can afford.

                        2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

                        keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

                          sully16's avatar - sharan
                          Ringleader
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                          October 28, 2009
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                          Posted: February 19, 2010, 9:30 am - IP Logged

                          enough said

                          Did you exchange a walk on part in the war ?

                          For a lead role in a cage?

                           

                                                                      From Pink Floyd's " Wish you were here"

                            Avatar
                            CA
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                            December 26, 2009
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                            Posted: February 19, 2010, 3:53 pm - IP Logged

                            Keep in mind that the tax bracket you'll be in will be much higher than 25% so the with holdings will not cover your taxes.   You can be fairly certain that you will have to pay taxes and a lot of taxes at that.

                            The entire concept of taxation has traditionally been based on 50%.   It's only legislative exceptions that makes the lowest tax bracket 17%.   Even if the millions and millions that a jackpot win would be placed you in the 50% tax bracket, you would not be paying 50% just close to it because you would still be paying only 17% for the first tax bracket and so on up to the top tax bracket.   The tax bracket is simply the marginal tax rate on which your next dollar is to be taxed at.

                            If you take a good hard look at the tax implication than a cash value option is pretty much the wrong way to take a jackpot prize.   An annuity is essentially a tax deferred investment at about 5% interest rate which may not seem like much but with money like that, you won't have very many options at getting tax deferred investments and after tax investments will have to do much better than 5% in order to match tax deferred growth, also by spreading out the tax load over multiple years you get the advantage of the lower tax brackets each year even though each year's income is enough to still put you into the top tax bracket.   Besides, if you choose the annuity, you can still change your mind and take the cash value option in most cases but not vice versa so when you buy a ticket, you should always select the annual payments even if you think you may want the money up front.

                            They give you a W2-G with the check, it's actually printed on the same sheet of paper as the check and you just detach the check from the W2-G.   I've only won $1,000 but I've kept a scanned image of the W2-G and the check, I'm planning on framing a scan of the check.

                            What I'm saying is you'll only be in the highest bracket only for the year that you win right? Say I win this year and when I file in 2011 I list the winnings and interest (if any) as income. If I am unemployed during 2011 and didn't earn interest, I wouldn't have to file in 2012.

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                              Posted: February 19, 2010, 10:32 pm - IP Logged

                              What I'm saying is you'll only be in the highest bracket only for the year that you win right? Say I win this year and when I file in 2011 I list the winnings and interest (if any) as income. If I am unemployed during 2011 and didn't earn interest, I wouldn't have to file in 2012.

                              Correct.  No earnings, no interest = No taxes

                               

                              Where are you planning to put all that cash?  I think you'll need a bigger mattress.