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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
410 Posts
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Posted: February 20, 2010, 1:03 am - IP Logged

Maybe a biometric safe? Lol.

    LadyMylena's avatar - avatar6 1.jpg
    Kansas
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    Member #83963
    December 19, 2009
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    Posted: February 20, 2010, 1:06 am - IP Logged

    Correct.  No earnings, no interest = No taxes

     

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

    LMAO!!! That would be me! I'd definitely need a bigger mattress. Wink

    Luck is  ** believing  ** you're lucky.” ~Tennessee Williams

    Money is neither my god nor my devil. It is a form of energy that tends to make us more of who we already are, whether it's greedy or loving.  ~ Dan Millman


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      December 13, 2009
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      Posted: February 20, 2010, 3:32 am - IP Logged

      You'll actually be better off being in the highest tax bracket each year as would be the case with the annuity because the way taxes work is that you get taxed at a certain rate for the first tax bracket worth of income that year, at the next tax bracket rate for the amount made between that first tax bracket limit and the next tax bracket limit and so on so each tax bracket is sort of an allowance that you can have taxed at the lower rates.   If you took the whole jackpot in one year than you only get one allotment of the lower tax rates and the majority of your money will be taxed at the highest tax rate while if you took the annuity, you would get the lower rate allowance for each year that you've spread the jackpot out over as well as having the benefit of tax deferred earnings via the annuity.   In the states, you always have to file if you're a citizen or a green card holder regardless of where you are in the world, if you have no income whether from a job or from interest, you still pay the AMT (Alternative Minimum Tax).   Normally they don't go after the poor unemployed slobs that don't file but if you've won a lottery, they will definitely go after you.

       

      This was in response to BadBoy00z posting about paying the taxes all in one year and not having to file in subsequent year.   Somehow I forgot to click the include original post thing.

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        Milwaukee, WI
        United States
        Member #3131
        December 27, 2003
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        Posted: February 20, 2010, 6:21 am - IP Logged

        OK, I live in Wisconsin, a big tax State.

        I would take the Cash amount and move to Wyoming or South Dakota without a State income tax.

        If I take the annuity I have to file with Wisconsin every year for the rest of my life.

        Now, seeing that I want to give a large amount to charity anyway, could I say split my winnings between me for  my part, and the other half to a new Charitable foundation?

        MarkP

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          Member #83701
          December 13, 2009
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          Posted: February 20, 2010, 3:53 pm - IP Logged

          OK, I live in Wisconsin, a big tax State.

          I would take the Cash amount and move to Wyoming or South Dakota without a State income tax.

          If I take the annuity I have to file with Wisconsin every year for the rest of my life.

          Now, seeing that I want to give a large amount to charity anyway, could I say split my winnings between me for  my part, and the other half to a new Charitable foundation?

          MarkP

          That would just guarantee that you would pay the maximum amount of taxes.   If you took the annuity and then moved to a tax friendly state, you can argue that your centers of interests had changed and you were no longer subject to Wisconsin state taxes on subsequent payments.   You would still have to file but you may get more back from the state taxes as you would no longer be resident there.

          In general, most lottery commissions will allow you to opt for the cash option at the point of claiming if you had selected an annuity and indeed an annuity could be sold for the cash value so if you bought a ticket with the annuity option, you could still opt for the cash settlement but not vice versa.    Therefore it's best to purchase the ticket with the annuity option and should you be fortunate enough to win, consult with a tax attorney and an accountant to determine whether to claim the annuity or the cash value, there's really no need to paint yourself into a corner based on your own amateur understanding of tax law.

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            New Member
            Illinois
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            October 17, 2009
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            Posted: February 20, 2010, 5:21 pm - IP Logged

            most of the lotteries have a clause that say even if you move within (example 5 years) of winning a major jackpot, you still owe taxes to original state on those annual payments.  then after 5 years you can claim yourself a resident of said new state.

              tiggs95's avatar - Lottery-036.jpg

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              November 4, 2006
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              Posted: February 20, 2010, 6:18 pm - IP Logged

              most of the lotteries have a clause that say even if you move within (example 5 years) of winning a major jackpot, you still owe taxes to original state on those annual payments.  then after 5 years you can claim yourself a resident of said new state.

              Thanks for the info..I welcome this problem with open arms..

                LadyMylena's avatar - avatar6 1.jpg
                Kansas
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                December 19, 2009
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                Posted: February 20, 2010, 9:08 pm - IP Logged

                Thanks for the info..I welcome this problem with open arms..

                Bring it on! I'm ready with the "problems" that winning will bring, cuz I've had my FILL of the problems "not winning" has brought. Dead

                Luck is  ** believing  ** you're lucky.” ~Tennessee Williams

                Money is neither my god nor my devil. It is a form of energy that tends to make us more of who we already are, whether it's greedy or loving.  ~ Dan Millman


                  sully16's avatar - sharan
                  Ringleader
                  Michigan
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                  October 28, 2009
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                  Posted: February 21, 2010, 9:29 am - IP Logged

                  Bring it on! I'm ready with the "problems" that winning will bring, cuz I've had my FILL of the problems "not winning" has brought. Dead

                  our govenor keeps coming up with new ways to tax us , now it's going to be service taxes. dog groomer tax , lawn mowing tax...now the state is in the small business- business, they won't be happy until every mom and pop operation is kaput.yet if your on welfare here you can get 2000 cash 1500 for food thats 42,000 a year. for people who have never worked have no intentions of ever working, the unemployed here are suffering in the worst way. they are the homeowners who pay the property taxes that support school, law enforcement, the fire department , sanitation dept.when they can't pay their property taxes anymore the state will collapse on its-self we have record mortgage foreclosers and record tax foreclosers here. the unemployed here don't qualify for help other than their unemployment checks , they have to lose it all before they get a hand out or help. how sad!

                  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"

                    truecritic's avatar - PirateTreasure
                    Michigan
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                    Member #22395
                    September 24, 2005
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                    Posted: February 21, 2010, 10:12 am - IP Logged

                    our govenor keeps coming up with new ways to tax us , now it's going to be service taxes. dog groomer tax , lawn mowing tax...now the state is in the small business- business, they won't be happy until every mom and pop operation is kaput.yet if your on welfare here you can get 2000 cash 1500 for food thats 42,000 a year. for people who have never worked have no intentions of ever working, the unemployed here are suffering in the worst way. they are the homeowners who pay the property taxes that support school, law enforcement, the fire department , sanitation dept.when they can't pay their property taxes anymore the state will collapse on its-self we have record mortgage foreclosers and record tax foreclosers here. the unemployed here don't qualify for help other than their unemployment checks , they have to lose it all before they get a hand out or help. how sad!

                    Can you post some links that backup the amounts you have posted?  I have NEVER seen anyone on welfare receive $42,000 per year - not even a woman with a baby.   I am not aware of most welfare recipients even getting $10,000/yr.  Some have several kids and I do not know what the maximum is for them.  I can't keep up with everything Jennifer does, if you could point me to some links, I'd be interested.

                    I have seen more than one example of women "playing the system"  - by going getting free food food from several places on a regular basis.  So, instead of receiving a few items, they can fill up the trunk of their car with food.  I have read about welfare cheaters that had false ID's getting enough to own a cadillac and more.  I have heard of, again, mostly women dealing drugs and turning tricks while collecting welfare.

                      sully16's avatar - sharan
                      Ringleader
                      Michigan
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                      October 28, 2009
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                      Posted: February 21, 2010, 10:31 am - IP Logged

                      i'm a cashier i see their balances every day these are the section 8 people.some of these people come in the first half of the month with mich welfare than the second half of the mont with a different states welfare, we have no way of turning most of these people in because theres no names when you do turn them in nothing is done.someone in the welfare admin or even several are most likely in cahoots because i've seen some people with 4 kids and they only get 41 or maybe 70 a month. iv'e personally seen the cash and food balances ....i'm saving receipts. when someone buys 9 cases of redbull than i really don't think they are hungry, i think gasstations and party stores are in on the action. go to a bingo hall and ask someone how to get fake birth certs and you will get and answer.

                      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"

                        truecritic's avatar - PirateTreasure
                        Michigan
                        United States
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                        September 24, 2005
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                        Posted: February 21, 2010, 11:08 am - IP Logged

                        i'm a cashier i see their balances every day these are the section 8 people.some of these people come in the first half of the month with mich welfare than the second half of the mont with a different states welfare, we have no way of turning most of these people in because theres no names when you do turn them in nothing is done.someone in the welfare admin or even several are most likely in cahoots because i've seen some people with 4 kids and they only get 41 or maybe 70 a month. iv'e personally seen the cash and food balances ....i'm saving receipts. when someone buys 9 cases of redbull than i really don't think they are hungry, i think gasstations and party stores are in on the action. go to a bingo hall and ask someone how to get fake birth certs and you will get and answer.

                        So, those balances are off the Bridge card?  Are they also immigrants?

                          TheOtherOne's avatar - Lottery-027.jpg
                          Nashville, TN
                          United States
                          Member #86739
                          February 9, 2010
                          483 Posts
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                          Posted: February 21, 2010, 11:39 am - 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 about tax shelters?

                          If you won a huge jackpot and took the lump sum of cash, you could invest it in various things such as Real Estate, small business, etc, and wouldnt that help to shelter you?

                          When I win the lottery (tsk tsk), I plan to invest a lot in Real Estate, Stocks, and becoming a pro Craps player [ :) ], so hopefully the Real Estate investments would help some.

                          Is this still the case?

                            cosmotravis's avatar - f ssr.jpg

                            United States
                            Member #65357
                            September 25, 2008
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                            Posted: February 21, 2010, 2:49 pm - IP Logged

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

                            And from our employees no less.

                            no kidden RDG,   it's ashame people don't get smart

                            the working class is too busy working to care

                            and the poor class is too lazy to do anything about it.

                              cosmotravis's avatar - f ssr.jpg

                              United States
                              Member #65357
                              September 25, 2008
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                              Posted: February 21, 2010, 2:52 pm - IP Logged

                              "if your on welfare here you can get 2000 cash 1500 for food thats 42,000 a year."

                              sounds like I better move to michigan.