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Winning the Jackpot and taxes.

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

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United States
Member #83701
December 13, 2009
225 Posts
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Posted: February 25, 2010, 2:10 pm - IP Logged

The  lottery runs the lottery, period. They have absolutely no authority over rules ands regualtions about taxes or residency. Since the states aren't stupid you can expect that an income that comes from a state will be taxed by that state regardless of where you live. It's the source of the income that determines which state gets first claim on the income tax, not your residence. Just as a non-resident will pay taxes to the state that pays them a lump sum, a resident who moves will continue to pay taxes to the state that the annuity payments come from.

States will also sometimes claim that your tax domicile hasn't changed even though you may have secured, and are staying at, a residence in another state. If the state can establish that your tax domicile is still in that state, then that's the state you'll pay taxes to. "Moving" to a new house while maintaining your existing house and keeping the same bank accounts, etc, is an indication that the new house is only a temporary residence, and the old house is still your permanent residence. If you're a normal working stiff making 30 to 50k it's very unlikely that the state will claim you haven't really changed your tax domicile when you move. If you've got an income that results in a substantial tax bill and you move to a different state with lower taxes they may pursue the matter if there are indications that you're just trying to avoid the taxes. While the lottery would be one reason that your income might result ina substantial tax bill, the law is strictly a state law that has norelation to the lottery. If you really move you'll be opening new bank accounts, getting a new drivers license, etc. You may decide that owning rental or investment properties is a good idea, but you would be wise to sell your old house and buy other properties if you want to maintain properties in your old state. Better still, any property should be owned by a corporation. Even so, creating business ties to the old state is an indication that you don't really intend to sever your financial relationship with that state.

Taxation residency is based on the concept of "centers of vital interest".   Source of income is a big one but is only one third of the picture, moving, closing old bank accounts, opening new ones, new memberships, selling property etc. goes a long ways to establishing a different tax residence.   It's possible to avoid the state taxes of a lottery but it may always be necessary to file a return.   It's more a matter of having to pay the state's taxes but being able to claim most of it back.   Regardless, it's a matter for the tax professionals and you should keep your options open for the professionals to advise you on.   If you select the cash value option, you'll have no choice but to pay the taxes that year though you could then purchase an annuity with whatever is left but if you took the annuity, the cash value option is still available should your tax advisors decide it's prudent.

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    United States
    Member #83701
    December 13, 2009
    225 Posts
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    Posted: February 25, 2010, 2:18 pm - IP Logged

    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.

    There was that one woman in California who was collecting $300,000 a year from Welfare.   She only got caught because she was living in a rather large mansion.   Whenever you have a system, people will find ways to abuse it.

    It's all pretty sad because you know there are people out there who need the assistance but aren't getting it simply because they are too honest.   I always thought that public assistance should be strictly on an outreach basis with periodic review by different social workers.   When I was in the midst of my heart failure, I was hard pressed to get from the bedroom to the bathroom never mind ask anyone for help, the people who most need public assistance are the ones least able to navigate the bureaucracy involved which means the ones that benefit the most from our current systems are the ones that abuse them.   At least the lottery, like justice, is blind; everyone has the same chance.

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      CA
      United States
      Member #84266
      December 26, 2009
      410 Posts
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      Posted: February 25, 2010, 5:34 pm - IP Logged

      If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you? Our country is in a trillion dollar debt afterall.

      If you take the lump sum cash and decide to just live off that without investing at all, is it possible to go broke just from paying taxes?

      jwhou, you seem to be very well educated on this topic. If you won the JP, how will you go about securing your winnings? What kind of bank account will you get? Obviously a normal checking or savings account isn't ideal so a customized private banking account is the way to go? Normal accounts are FDIC insured up to only $150k. Is it the same with private banking accounts? Is it a reasonable fear that if something goes wrong you will only get $150k of the millions and millions that you originally had?

        TheOtherOne's avatar - Lottery-027.jpg
        Nashville, TN
        United States
        Member #86739
        February 9, 2010
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        Posted: March 2, 2010, 1:06 am - IP Logged

        I'm not sure what that 2nd sentence is supposed to mean, but property taxes and other costs of maintaining a rental property would be deductions that reduce the taxable income from the rent that's collected. No matter how long you own the property, you will owe some kind of income tax on any profit when you sell it, unless that income is exempted. There used to be a once-in-a-lifetime 125k exemption if you were over 55 and bought another home of equal or greater value. The rules have changed, and there is now a 250k exemption for each sale, but that is subject to some rules. If the house is your principal residence you get the exemption. For a rental or investment property you won't get the exemption.

        What I meant was, if you own property but rent it out or make money off it somehow (i.e. farmland with cattle or selling the grass on it as hay, etc) then you could recoup some of your property tax loss.

        Not sure if it would make up the difference.

        Obviously I have never owned investment property but it would be nice.

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          CA
          United States
          Member #84266
          December 26, 2009
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          Posted: March 2, 2010, 4:23 am - IP Logged

          You will need tp pay income tax on your profits. Bascially no matter what you do the Government will find a way to take your money.

            rdgrnr's avatar - walt
            Way back up in them dadgum hills, son!
            United States
            Member #73904
            April 28, 2009
            14903 Posts
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            Posted: March 2, 2010, 8:05 am - IP Logged

            If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you? Our country is in a trillion dollar debt afterall.

            If you take the lump sum cash and decide to just live off that without investing at all, is it possible to go broke just from paying taxes?

            jwhou, you seem to be very well educated on this topic. If you won the JP, how will you go about securing your winnings? What kind of bank account will you get? Obviously a normal checking or savings account isn't ideal so a customized private banking account is the way to go? Normal accounts are FDIC insured up to only $150k. Is it the same with private banking accounts? Is it a reasonable fear that if something goes wrong you will only get $150k of the millions and millions that you originally had?

            "If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you?"

             

            In the current environment I would say it is a very reasonable fear. We now have the most unstable, inexperienced, undisciplined, irresponsible government in our nation's history. I wouldn't trust them in the outhouse with a muzzle on. Take the cash and run.


                                                         
                                 
                                                     

             

             

             

             

                                                                                                               

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

                                                                                                        --Edmund Burke

             

             

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              New York,
              Panama
              Member #73078
              April 4, 2009
              3490 Posts
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              Posted: March 2, 2010, 8:32 am - IP Logged

              "If one takes the annuity, is it a resonable fear that the government will loose your money or not give it to you?"

               

              In the current environment I would say it is a very reasonable fear. We now have the most unstable, inexperienced, undisciplined, irresponsible government in our nation's history. I wouldn't trust them in the outhouse with a muzzle on. Take the cash and run.

              rd and I Agree    I Agree!      Take the Cash and Run! Like Hello!!

              forget what "they" say about youWhat you say about you?...

              Now, does it count??

               

               

              *Jr$ina

                joshuacloak's avatar - Money Swim-uncle-scrooge-mcduck-35997717-677-518.jpg

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                Posted: March 2, 2010, 6:39 pm - IP Logged

                todays headlines i say go with the cash

                take these clues

                 

                budget deficits projected to hit almost $1.6 trillion this year.

                American reliance on government at all-time high

                transfer payments from the government such as unemployment checks and Social Security burgeoned by $231 billion to $2.1 trillion. Mean while, the amount of taxes that individual Americans paid plummeted by $325 billion to $2.1 trillion as a result of middle-class tax cuts and  because nearly 6 million people were thrown out of work and are no longer paying payroll taxes.

                 

                if your a "real"  economist , that does not get paid by say anyone in DC,

                you know the balance job ratio's are so out of wack

                Govt jobs to "private": jobs has gone so out of wack,  as the private secter scaled back, govt take over more and more of % of total jobs

                under bash/reps we spended a ton, and under the dems we are spending even more"record debt"

                 

                this is pure madness,  so form a economist stand point,take the money and run

                govt jobs besides say something like  Lottery jobs,  dont pay for them selfs people!

                its more LEECHING on the real wealth of our nation

                you can sure right now  get away with a fed 35% max tax rate of say a major pb or mm jackpot cash jackpot

                if the  people in DC  wants to create jobs,

                yet tax the rich, this is such a oxymoron its beyond belief,

                where do you think must of the jobs come form?

                people with MONEY! , take away their money, and you get less jobs

                 

                no tax's = jobs pop up left and right, 

                the govt is headed by a bunch of retarded children when it comes to money

                for gods sakes, take the money and run away form this madness while you still can

                let me say this about what i think of whats happening right now

                if i was by design trying to kill a nation, when real jobs are being  destoryed

                i  make higher  taxes to the "rich"

                , while create as many govt jobs as i could , encourge record welfare type  payments to massives

                and make so much debt via record spending as i could,

                the govt doing the very same things as some evil villians wanting to destroy a nation by Economic means

                 

                besides, we all know  majority of voters are idiots, whoever they vote into office will just be "their stupid leader"

                the leader of the blind is blind him self,

                 

                besides Economic logic

                that small Annuity payment

                Will not cover large buys, such as a massive house and ever thing you want the first year

                 

                in my own case, i would spend over 1/3rd of it in the first years, just to live it up

                why the bank loans would cover all your needs, why waste money on some interest payments


                people who have taken the annuity payment are not immue to being stupid, they get in debts too, want proof, look at old winners stories who taken it

                stupid people cant be fixed,

                 

                smart people go with the freedom of having all the cash now

                they KNOW how to get more money then say  a 26 or 30 year govt  bonds

                 

                i like to think of people who take the Annuity as the same people who think Social Security not a bad deal

                 

                 

                besides, their so MANY options to invest a ton of money into right now,

                annuity has the  illusion of security ,

                real security is having the freedom to invest your own money however you wish, and to reap the results of it