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Which way would work best?

Topic closed. 11 replies. Last post 6 years ago by ameriken.

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Idaho
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January 5, 2011
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Posted: January 5, 2011, 8:56 pm - IP Logged

Long time lurker, first time poster. Smile

It was a bummer for me this morning. I bought Mega Millions tickets in Idaho and Washington. None of mine were the big winners. I recently moved to Idaho near the Washington state line. I moved here from Las Vegas because of my job. I have kept my Nevada drivers license, I will eventually move back. Immediately upon jackpot win, LOL.

I've tried to figure which way would be best for when I win :).

Should I be buying my tickets in Washington (no state income tax) or Idaho (7.8% state income tax). I'm thinking about buying them only in Washington based on no tax. If I bought them in Idaho and won, would I still have to pay the income tax on it if I claimed it with a Nevada ID? After looking at last nights jackpot, Idaho would have taken about $22,000,000 in income taxes. Federal taxes at 35% are bad enough.

I have never lived in a state with an income tax before so not real sure how all that works.Can someone explain it to me?

Thanks

    ameriken's avatar - 33ojew2
    Denver, Co
    United States
    Member #103046
    December 29, 2010
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    Posted: January 5, 2011, 9:32 pm - IP Logged

    I don't think it's a matter of where you buy the ticket, but rather where you are a resident.

    As far as I know, whether you win the lottery or not, you have to have a state of residency, in other words where do you live and work, buy insurance, where you are paying utility bills, the address you give your employer, get your mail, do business, etc. When you file your income taxes every April, you have to put a resident address.

    Having said that, I'm sure it doesn't matter where you buy your tickets, what matters is where you are a tax paying resident when you win. And I wouldn't try to fool the governments, if the state decides to audit you (which I would bet they will if you did win the lottery), they'll look at your situation and life and decide what your residence is and then decide how much taxes (and penalities) you owe. So, you've got to decide what state you are a resident of.

      savagegoose's avatar - ProfilePho
      adelaide sa
      Australia
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      April 11, 2006
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      Posted: January 6, 2011, 9:41 am - IP Logged

      1st off , i dont think  deciding what state to live in should be based on  how much tax you will apy when you win the lotto.

      I admmire your optimism, but chances are you aint gonna win.

      as ameriken points out its base don where you reside, and apart from moving you cant really change that.

      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

        Raven62's avatar - binary
        New Jersey
        United States
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        June 28, 2005
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        Posted: January 6, 2011, 11:01 am - IP Logged

        Long time lurker, first time poster. Smile

        It was a bummer for me this morning. I bought Mega Millions tickets in Idaho and Washington. None of mine were the big winners. I recently moved to Idaho near the Washington state line. I moved here from Las Vegas because of my job. I have kept my Nevada drivers license, I will eventually move back. Immediately upon jackpot win, LOL.

        I've tried to figure which way would be best for when I win :).

        Should I be buying my tickets in Washington (no state income tax) or Idaho (7.8% state income tax). I'm thinking about buying them only in Washington based on no tax. If I bought them in Idaho and won, would I still have to pay the income tax on it if I claimed it with a Nevada ID? After looking at last nights jackpot, Idaho would have taken about $22,000,000 in income taxes. Federal taxes at 35% are bad enough.

        I have never lived in a state with an income tax before so not real sure how all that works.Can someone explain it to me?

        Thanks

        If you Lie about your Place of Residence: In the eyes of Idaho you'll be a Tax Cheat: Then you'll have 20 years in Prison to Think about what you did!

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

          Boney526's avatar - NjlpLogo
          New Jersey
          United States
          Member #99032
          October 18, 2010
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          Posted: January 6, 2011, 11:25 am - IP Logged

          I don't *know* that this would be legal, but you could potentially (and I'd look up the laws on this) buy your tickets in Washington, and if you win you could (maybe?) move there before claiming the win to avoid the taxes.

           

          Although if you did something like that I know New Jersey would be after you.  In fact, in NJ your supposed to be "Sales and use" tax which means if you buy something in the State or something to be used in the State, then your supposed to give the state government 7%.  That means if I buy (say, an Xbox) in Delaware, I'm supposed to pay taxes to NJ.  Of course, they only go after people who are buying really expesive things out of State, but in much the same way, I'd assume if you hit a Jackpot, then I'd guess Idaho would come after you if you lived there.

            ameriken's avatar - 33ojew2
            Denver, Co
            United States
            Member #103046
            December 29, 2010
            546 Posts
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            Posted: January 6, 2011, 12:27 pm - IP Logged

            Speaking of residency, most states have some kind of residency law that if you are living and working in their state for a certain amount of time (30 days?) and are going to be staying there for a while, then your drivers license should reflect that. It really sounds like you are an Idaho resident, so keep yourself clean and legal and on the up and up and change your license to Idaho, get Idaho auto insurance, so on and so forth.

            If you really do win a sizable amount in a lottery (by sizeable, I'm not talking about mllions, it could even be just $25,000), you really don't want the IRS and State Depts of Revenue crawling all over your books and records trying to determine who the taxes belong to. Perhaps you'll even end up hiring a tax attorney at $400/hour to help you get through the audit nightmares.

            And in your situation, you may actually be making things more complicated for yourself and could have 2 or 3 states looking for you: Nevada because you have a license there, Washington because that is where you bought the ticket, and Idaho because that is where you are living. And I would be willing to bet that the IRS and all 50 states track all the sizeable lottery winners throughout the nation to make sure the Feds and the states are getting their fair shares of those large winnings. They will know who you are if and when you win.

            So, keep it clean and simple and legal. Besides, if you win a big jackpot and go home with several million dollars after taxes, you won't even care that 7.8% is gone.

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              NY
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              Posted: January 6, 2011, 12:43 pm - IP Logged

              Whatever state you're a resident of gets to collect income tax on all of your taxable income, assuming that state has an income tax. Any state is entitled to collect income tax on any income earned in that state, again, assuming that state has an income tax.

              If you win with a ticket from a state you don't live in and that state does have an income tax you'll definitely be paying income tax to that state. Most states (probably all, but I'm not positive), will give you a full credit for the taxes paid to another state on the out of state income. That means that if the state  where you bought the ticket has a 7% tax and your home state has a tax of 7% or less you won't owe anything extra to your home state. OTOH, if the tax in your home state is higher you'll pay the difference to your home state.

              The government has (surprise!) plenty of rules to determine where your residence is. It's certainly possible to live in Idaho and be a resident of a different state. Once you've moved for your job some vague plan to eventually move back to Nevada won't keep you from being a resident of Idaho unless the job is supposed to be temporary and calls for a return to Nevada at some reasonably well defined time. FWIW, your drivers license doesn't necessarily mean much about your residence, and if you've lived in Idaho for more than 30 days without  getting an Idaho license you've probably broken the law even if you aren't a resident of Idaho.

              One thing that's absolutely clear is that  your tax obligations are based on your residence at the time you get "constructive receipt" of the income. For a lottery ticket that will be the instant that the drawing makes your ticket a winner. Having to wait  a couple of weeks for a check may let you pay taxes in the following year if you can't actually collect the money before 12/31, but who gets the tax will depend on your residence at the time of the drawing.

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                Idaho
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                Posted: January 6, 2011, 2:37 pm - IP Logged

                Oops, sorry about that. I guess I didn't clarify. Idaho has a minimum 6 months to become a resident. I have only been here 3 months. I am kind of in limbo. LOL

                  ca-dreamin*'s avatar - Lottery-065.jpg
                  Chicago
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                  Posted: January 6, 2011, 11:53 pm - IP Logged

                  Oops, sorry about that. I guess I didn't clarify. Idaho has a minimum 6 months to become a resident. I have only been here 3 months. I am kind of in limbo. LOL

                  If you're earning money in Idaho they may consider you a part-time resident. You may have to file State income taxes with them.

                  Just get me thru this so called life......

                    ameriken's avatar - 33ojew2
                    Denver, Co
                    United States
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                    Posted: January 7, 2011, 12:12 am - IP Logged

                    Oops, sorry about that. I guess I didn't clarify. Idaho has a minimum 6 months to become a resident. I have only been here 3 months. I am kind of in limbo. LOL

                    No need to worry. If you actually won and didn't pay the right taxes to the right place, I'm sure the tax auditors in NV, ID, and the IRS will help you find your way out of limbo and determine where you are resident and how much taxes, penalties, and interest you owe to whom.

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                      Idaho
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                      Posted: January 7, 2011, 12:34 pm - IP Logged

                      LOL. I'm sure you are right. I will be welcomed with open arms by ID. Hahaha. It would be a great problem to have, lol.

                      Good luck everyone.

                        ameriken's avatar - 33ojew2
                        Denver, Co
                        United States
                        Member #103046
                        December 29, 2010
                        546 Posts
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                        Posted: January 7, 2011, 1:13 pm - IP Logged

                        True, that's one problem I pray for: a very large tax bill from winning the lottery.