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Lottery tax question...

Topic closed. 21 replies. Last post 3 years ago by a911scanner.

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FL
United States
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June 13, 2010
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Posted: February 23, 2014, 9:05 am - IP Logged

Just curious on something.  I live in a state that doesn't have state income tax (Florida).

One person told me the tax on FL lottery winnings is 25% one time at the time you claim your prize and nothing more.  Another person told me it's the 25% then another 14% when you do your taxes in the beginning of the year for a total of 39%.

So who is right?  If it's the latter, that kind of blows.... Unhappy

    rcbbuckeye's avatar - Lottery-043.jpg
    Texas
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    Member #55889
    October 23, 2007
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    Posted: February 23, 2014, 9:21 am - IP Logged

    Just curious on something.  I live in a state that doesn't have state income tax (Florida).

    One person told me the tax on FL lottery winnings is 25% one time at the time you claim your prize and nothing more.  Another person told me it's the 25% then another 14% when you do your taxes in the beginning of the year for a total of 39%.

    So who is right?  If it's the latter, that kind of blows.... Unhappy

    In Texas, if you win over $5000, they will take 25% when you claim. How much you have to play when you file your tax return depends on your income and your deductions determining what tax bracket you would be in. You may get some back, you may have to pay more. If you win a major jackpot (millions), you most likely will be in the top tax bracket and you would pay more.

    CAN'T WIN IF YOU'RE NOT IN

    A DOLLAR AND A DREAM (OR $2)

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      Posted: February 23, 2014, 9:22 am - IP Logged

      I'm not sure, but I think you only pay federal and state taxes when you claim your winnings.  And you don't pay any income taxes on this money the following year.  You will get a statement from your bank on the interest that was paid to your account and I think you pay taxes on that.

        notmyday's avatar - 8ball
        florida
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        December 16, 2012
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        Posted: February 23, 2014, 9:30 am - IP Logged

        in fl you pay 25% up front and depending on your writeoff you will get a 1099 for a gambling tax so yes it is additional 14% that is what gets most people as they dont save any money back for that. but if you win you are still ahead of the game so a win is a win. now i havent won myself yet but a good friend did and he got hit with the gambling part of the tax at the end of the year so he is now on a payment system with them as he spent all of his winnings and didnt set any back.

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          Posted: February 23, 2014, 9:48 am - IP Logged

          I did not know about a gambling tax, think that gambling tax is for most states?

            Saylorgirl's avatar - Lottery-065.jpg
            Indiana
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            Posted: February 23, 2014, 9:49 am - IP Logged

            In every state if you win the jackpot you will pay 25% in federal  taxes when you collect your winnings.  The additional 14.6% will be due on April 15th the following year.  A good account and proper planning can reduce this amount depending on your deductions.  You are lucky in Florida you do not pay an additional tax to your state.  Many states have state taxes that are due when you collect your winnings.

              Artist77's avatar - batman14

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              Posted: February 23, 2014, 10:03 am - IP Logged

              This is sort of related. When I met with my accountant yesterday to get my tax return filed, I asked him a question about lottery winnings.  He is a Sr. accountant and said ALL gambling $ spent could be offset up to the amount of the winnings. So if you win PB, you can alslo deduct money spent on MM, scratchers and all games (have to save your tickets). I thought this was the case but wanted to verify it.

              J'aime La France.

                CDanaT's avatar - tiger avatar_04_hd_pictures_169016.jpg
                TX
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                Posted: February 23, 2014, 10:04 am - IP Logged

                Just curious on something.  I live in a state that doesn't have state income tax (Florida).

                One person told me the tax on FL lottery winnings is 25% one time at the time you claim your prize and nothing more.  Another person told me it's the 25% then another 14% when you do your taxes in the beginning of the year for a total of 39%.

                So who is right?  If it's the latter, that kind of blows.... Unhappy

                Hemi,

                Just remember, lottery is the same as earned income. The federal government automatically takes 25%, right off the bat. But, because it is earned income, you will be taxed at the rate of 39.6%(highest at the government level)
                   Be ready if you win a jackpot this year because you will end up paying that additional 14.6% on April 15th, 2015. Minus any deductions that you acrue.
                EX:
                You win $40 million cash, Feds take $10 million(25% initial take) which leaves you $30 million.Federal Income Tax rate on $40 million is 39.6%( $15,840,000.)
                You  STILL owe the difference between the initial $10 million they took and the actual tax rate of $15,840,000  which = $5,840,000. minus any deductions you  have.

                Just as the other LP members have stated above

                For me, knowing the $5,840,000 is due next year, I would look at what I know I should clear which is approximately $24,160,000. and use that as the actual amount to guide to my future 

                *You must keep in mind knowing that you will ALSO pay taxes on any interest/dividends from that 30 million should you invest it after you win this year-2014.

                  maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
                  Massachusetts
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                  Posted: February 23, 2014, 10:11 am - IP Logged

                  Hemi,

                  Just remember, lottery is the same as earned income. The federal government automatically takes 25%, right off the bat. But, because it is earned income, you will be taxed at the rate of 39.6%(highest at the government level)
                     Be ready if you win a jackpot this year because you will end up paying that additional 14.6% on April 15th, 2015. Minus any deductions that you acrue.
                  EX:
                  You win $40 million cash, Feds take $10 million(25% initial take) which leaves you $30 million.Federal Income Tax rate on $40 million is 39.6%( $15,840,000.)
                  You  STILL owe the difference between the initial $10 million they took and the actual tax rate of $15,840,000  which = $5,840,000. minus any deductions you  have.

                  Just as the other LP members have stated above

                  For me, knowing the $5,840,000 is due next year, I would look at what I know I should clear which is approximately $24,160,000. and use that as the actual amount to guide to my future 

                  *You must keep in mind knowing that you will ALSO pay taxes on any interest/dividends from that 30 million should you invest it after you win this year-2014.

                  I Agree! you nailed it.

                  That money's gone fo ever

                    schmuckatelly's avatar - half planet.jpg
                    Jacksonville, Florida
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                    Posted: February 23, 2014, 11:18 am - IP Logged

                    Just curious on something.  I live in a state that doesn't have state income tax (Florida).

                    One person told me the tax on FL lottery winnings is 25% one time at the time you claim your prize and nothing more.  Another person told me it's the 25% then another 14% when you do your taxes in the beginning of the year for a total of 39%.

                    So who is right?  If it's the latter, that kind of blows.... Unhappy

                    Also if you are not aware, anything over 600 is reported to the IRS but the withholdings dont start unless you win over $5,000. Also like a previous poster said, you can deduct your losses up to the amount of your winnings. But, if you dont have enough in dedections, it wont matter.

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                      FL
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                      Posted: February 23, 2014, 10:27 pm - IP Logged

                      Thanks for the info guys, that clears things up a bit. Smile

                        mikeintexas's avatar - tx avatar-1.gif
                        Texas Panhandle
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                        Posted: February 24, 2014, 1:04 am - IP Logged

                        In every state if you win the jackpot you will pay 25% in federal  taxes when you collect your winnings.  The additional 14.6% will be due on April 15th the following year.  A good account and proper planning can reduce this amount depending on your deductions.  You are lucky in Florida you do not pay an additional tax to your state.  Many states have state taxes that are due when you collect your winnings.

                        The last time the JP was huge, I did some figuring on that;  depending upon just when you claimed your prize and how large it was, you could make a fair amt. of interest on the difference - the 14.6%.  For example, if the JP was 100 million cash value and they took the 25 million out, you'd still get to use that 14.6 million.  I didn't get really involved with my calculations, but if you won/claimed the prize this month and even at .5% interest (one half of a percent), you could make something like $62k before taxes with Uncle Sam's money before you had to fork over the rest.   My math might be wrong (a distinct possibility) but 62k (or approx. 38k after taxes) is nothing to sneeze at.  It'd buy you a nice car, anyway.


                        A people that elect corrupt politicians, impostors, thieves and traitors are not victims...but accomplices.
                         - George Orwell

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                          Kentucky
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                          Posted: February 24, 2014, 10:19 am - IP Logged

                          Also if you are not aware, anything over 600 is reported to the IRS but the withholdings dont start unless you win over $5,000. Also like a previous poster said, you can deduct your losses up to the amount of your winnings. But, if you dont have enough in dedections, it wont matter.

                          "But, if you dont have enough in dedections, it wont matter."

                          And sometimes not enough in winnings because we lose most of our standard deductions using Schedule "A". If we have winnings of $5000 and have $5000 in losses, we're trading a $6100 standard deduction for $5000 in gambling losses.

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                            Zeta Reticuli Star System
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                            Posted: February 25, 2014, 12:53 am - IP Logged

                            Let's say you in PB at its $50M start point. Let's assume you opt cash and get about $28.2M (USA MEGA currently). So that's taxed on the spot at 25%. Now you have $21,150,000.

                            Next April 15th you're going to get taxed another 14.6%. $4,117,200 is 14.6% of $28.2M$

                            So since you have enough money to do this, would putting $4,117,200 in a CD or something pay the tax due the following April and make a few bucks. Or would you get taxed more because you did this?

                            I know it sounds like a lame question but I have heard people say yes and some say no.

                            Taxing gambling winnings is a real bad move by our government.

                            Bang Head

                            (And somebody please check my math!)

                            Saylorgirl, CDanaT?

                            Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                            Lep

                            There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                              LottoMetro's avatar - Lottery-024.jpg
                              Happyland
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                              Posted: February 25, 2014, 1:18 am - IP Logged

                              Let's say you in PB at its $50M start point. Let's assume you opt cash and get about $28.2M (USA MEGA currently). So that's taxed on the spot at 25%. Now you have $21,150,000.

                              Next April 15th you're going to get taxed another 14.6%. $4,117,200 is 14.6% of $28.2M$

                              So since you have enough money to do this, would putting $4,117,200 in a CD or something pay the tax due the following April and make a few bucks. Or would you get taxed more because you did this?

                              I know it sounds like a lame question but I have heard people say yes and some say no.

                              Taxing gambling winnings is a real bad move by our government.

                              Bang Head

                              (And somebody please check my math!)

                              Saylorgirl, CDanaT?

                              Think of it this way: if you invested money and made capital gains during the year, could you keep making money using the capital gains even though they are taxed? Yes, but you will have to pay tax on those returns and any returns on returns! LOL

                              Unless of course.....you put them in a tax-exempt security. Example, short-term municipal bonds. You would still have to pay the remainder or that 14.6% of the original income that wasn't withheld, but you get some tax-free interest in the meantime. CDs are not tax-exempt, just tax deferrable (i.e. CD IRA).

                              As always, laws vary by state and YMWV.

                              If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the potential payoff does.
                              If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

                              2016: -48.28% (13 tickets) ||
                              P&L % = Total Win($)/Total Wager($) - 1