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Redd55

United States
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March 12, 2015
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Nov 3, 2017, 9:43 am

They are proposing an increase on personal income over a million from 36.4% to 40 something %. Guess it is a small price to pay for winning a million smackeroos.

We've discussed this before, tho, I dont remember the consensus (as if there is ever one on LP) as to when a tax rate applies: date you won the prize or the date you pick up your Big Check?
grwurston

100

Same #'s. Different games.

United States
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April 24, 2010
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Nov 3, 2017, 9:06 pm

Quote: Originally posted by Redd55 on Nov 3, 2017
They are proposing an increase on personal income over a million from 36.4% to 40 something %. Guess it is a small price to pay for winning a million smackeroos.

We've discussed this before, tho, I dont remember the consensus (as if there is ever one on LP) as to when a tax rate applies: date you won the prize or the date you pick up your Big Check?

From the USA MEGA site.

If I live in a state that taxes prizes, but bought my ticket in a state with no tax on prizes, do I still need to pay state tax?
Yes, you do. Think of lottery prizes as regular earned income from a job. Just because you may work in a different state, that doesn't permit you to get away with not paying state income tax in your state of residence. The lottery works the same way.

Whether it's income from a job or income from gambling, the state where the money is won will tax the prize first at their out-of-state tax rate (assuming the state taxes lottery winnings). If your state of residence has the same or lower tax rate, then you won't owe anything else. But if your state has a higher rate, you will get a credit for what you paid in the other state, and pay the difference to your state.

If the other state has no tax, you just pay the entire tax bill to your state.

The net result is that you end up paying whichever tax rate is higher between your state of residence and the state where you purchased the ticket. Of course, the tax law is quite complex and it's possible that some condition or arrangement exists between the two states and a good tax attorney and/or accountant could discover a tax-saving loophole. That's why we always recommend that major prize winners do not make any major decisions before first hiring a good legal and financial team.

One other option to consider, depending on how much in taxes you're looking to save: the residency requirements as they relate to prize claims, state taxes, and income reporting. Since you aren't responsible for paying taxes until you claim the prize, perhaps there is time to establish residency in the state where you purchased the ticket before the prize claim period expires. However, that is something you would definitely need to explore with an attorney before taking any action to assess the feasibility. You would also need to decide if it would be worth the risk of that important little piece of paper not getting lost, damaged, or destroyed in the time you spend arranging everything
Artist77

United States
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January 16, 2012
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Nov 4, 2017, 10:20 am

Quote: Originally posted by Redd55 on Nov 3, 2017
They are proposing an increase on personal income over a million from 36.4% to 40 something %. Guess it is a small price to pay for winning a million smackeroos.

We've discussed this before, tho, I dont remember the consensus (as if there is ever one on LP) as to when a tax rate applies: date you won the prize or the date you pick up your Big Check?

Neither. It is when you actually receive the money.
music*

Fresno, California
United States
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August 2, 2014
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Nov 4, 2017, 8:50 pm

The news on TV has the top rate remaining the same at 39.6% This is for a million dollar or more income.

The rich will pay their fair share. I hope to be among them.

"Give unto Caesar what belongs to Caesar and give unto God what belongs to God". Taxes and Charity. Give both joyfully.

You would not be in this situation if you did not win one million dollars in the Lottery. Count your blessings.

"We are all in this together!"
Saylorgirl

Indiana
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June 13, 2012
595 Posts
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Nov 5, 2017, 8:32 am

Quote: Originally posted by music* on Nov 4, 2017
The news on TV has the top rate remaining the same at 39.6% This is for a million dollar or more income.

The rich will pay their fair share. I hope to be among them.

"Give unto Caesar what belongs to Caesar and give unto God what belongs to God". Taxes and Charity. Give both joyfully.

You would not be in this situation if you did not win one million dollars in the Lottery. Count your blessings.

While that is true that the top tax bracket will remain the same they have proposed a "bubble tax". This will take the tax rate on those making between $1,000,000 to $1,200,000 a tax of 46% on the $200,000. After that it will revert back to the 39.6% rate. Just a little penalty for those in a high tax bracket.
music*

Fresno, California
United States
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August 2, 2014
3,959 Posts
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Nov 9, 2017, 1:06 pm

Quote: Originally posted by Saylorgirl on Nov 5, 2017
While that is true that the top tax bracket will remain the same they have proposed a "bubble tax". This will take the tax rate on those making between $1,000,000 to $1,200,000 a tax of 46% on the $200,000. After that it will revert back to the 39.6% rate. Just a little penalty for those in a high tax bracket.

Saylorgirl, Both the U.S. House and Senate are looking at the new tax reform bill.

Observing how a tax bill is passed is like watching sausage being made.

I just want to be a winner who will handle millions of dollars with my advisers. Please grant me that opportunity!

"We are all in this together!"

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