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State Tax on Lottery Win

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You pay the state tax on a lottery win based on the state you reside in, not the state you purchase the ticket in, correct?  So if you travel to another state to buy Powerball or Megamillions tickets, you only pay the taxes based on where you reside.  It kinda is bad because I live in Maryland, which has one of the highest tax rates on lottery wins.  But, then again, it's unlikely that I'll ever win.  But you gotta hope!

RJOh's avatar - chipmunk

You pay in the state where you won and in the state where you live depending on each state tax rates.

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You win in New Jersey, and win in New York - you will be double-tapped; atleast.  As I've said before, where there is a law maker, there will be a tax collector.  They react to an increase in income the way maggots react to garbage.  They want everything they can get.

RJOh's avatar - chipmunk

If you live in or buy your winning ticket in a city that tax lottery winnings then you will pay there also.

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I'm lucky because Pennsylvania doesn't impose state tax on lottery winnings. So the worst case scenario would be I would be taxed by a state once, the one where I bought the ticket. And that's only if they tax winnings. If I won in California, Florida, or Tennessee I wouldn't have to pay any taxes to either them or Pennsylvania.

TheGameGrl's avatar - Lottery-012.jpg

You pay the state tax on a lottery win based on the state you reside in, not the state you purchase the ticket in, correct?  So if you travel to another state to buy Powerball or Megamillions tickets, you only pay the taxes based on where you reside.  It kinda is bad because I live in Maryland, which has one of the highest tax rates on lottery wins.  But, then again, it's unlikely that I'll ever win.  But you gotta hope!

I'll keep it simple. because you live in Maryland and they have the goofiest tax laws around. You'll pay no matter where you claim. Your state zaps you on the state level as well as the federal level.

So my suggestion is simple- move from that state and save yourself 7% on taxes ! (just kidding)

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montana 10% tax    Tenn has no tax  but I go to a town in S.C. it's called Fair Play IF I win 7% goes to SC no big deal  I have got powerball tickets at pts  what state do they use?

justxploring's avatar - villiarna

Can someone answer this for me?  I'll read many posts about tax and people use 25 or 28% for federal tax.  I believe the Federal personal tax is about 35% on a large jackpot. It used to be higher, but 2006 maximum income tax is 35%. So if you live in a state where tax is imposed (not in FL) then you could end up paying about 42% of your total winnings and that's AFTER you give up about 1/2 to take the lump sum.  Then they expect you to pay a huge Gift Tax if you want to give it away! Several lottery sites show they deduct 28% for federal, but I think the winner would need to pay more on a large jackpot unless he has a lot of deductions.

I copied this from the IRS website for 2006 so I think I am correct.

 Schedule X — Single

If taxable income is  over--But not over--The tax is:
$0$7,55010% of the amount over $0
$7,550$30,650$755 plus 15% of the amount over 7,550
$30,650$74,200$4,220.00 plus 25% of the amount over 30,650
$74,200$154,800$15,107.50 plus 28% of the amount over 74,200
$154,800$336,550$37,675.50 plus 33% of the amount over 154,800
$336,550no limit$97,653.00 plus 35% of the amount over 336,550

 

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I'm lucky because Pennsylvania doesn't impose state tax on lottery winnings. So the worst case scenario would be I would be taxed by a state once, the one where I bought the ticket. And that's only if they tax winnings. If I won in California, Florida, or Tennessee I wouldn't have to pay any taxes to either them or Pennsylvania.

Actually, you may be wrong!  NJ doesn't take taxes IF you play and win in NJ.  You play and win in another state; they are coming after you for maximum taxes.  So if I win in PA, I am clean in PA, but NJ will begin sending me love letters.  I emailed NJ State Treasuer, and that is what they said.  You might want to get your opinion in writing.

 

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You pay the state tax on a lottery win based on the state you reside in, not the state you purchase the ticket in, correct?  So if you travel to another state to buy Powerball or Megamillions tickets, you only pay the taxes based on where you reside.  It kinda is bad because I live in Maryland, which has one of the highest tax rates on lottery wins.  But, then again, it's unlikely that I'll ever win.  But you gotta hope!

I'll keep it simple. because you live in Maryland and they have the goofiest tax laws around. You'll pay no matter where you claim. Your state zaps you on the state level as well as the federal level.

So my suggestion is simple- move from that state and save yourself 7% on taxes ! (just kidding)

When I hit Powerball, in Pennsylvania, I will move to Pennsylvania the day of the drawing.  If I stay in New Jersey, I'll wind up paying NJ 12% on ganbling winnings.  Since I plan to move to greater places after a win any way, moving immediately, for s hort time, wouldn't bother me a bit.  $10M-$20M in taxes or move immediately and pay $0 in taxes - decisions, decisions!  Rent some place, some where, get your drivers license, register your vechicle, and wait a month or two, then claim the money.  No problem!

Would you lease me a room for 90-days, at $2,00.00 a day; payable at the end of the lease?

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Justxploring: Then they expect you to pay a huge Gift Tax if you want to give it away!

Never give money away.   Hire the person, sign a contract, pay them what you want, fire them.  Think Disney!   They do it all the time.   Buy a condo in Hawaii, hire grandma and grandpa as caretakers.   Buy a condo in NYC, hire mom and dad as investment consultants; researching investments in Broadway plays.  Buy a condo in Los Angeles for your brother and let him consult on land leases in Bel Air.  If Bill Gates can carry his wife on the payroll for years, at the high six figure rate, you can do a similar function.   Lease cars and let your employees drive them (Mercedes does it 365 days a year).    The expenses are business expenses, the losses are tax write-offs.    Expand your thinking, and you can see the possibilities.  Gift Tax?  Naw, it is like throwing away money.

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My understanding is state income tax laws vary from state to state, and some states have no state income tax at all. In my state, Louisiana, anyone who earns income here has to pay state income tax on it, regardless of where they actually reside. In other words, if you commute across the border from MS, TX, or AR to work, you have to pay Louisiana state income tax.

If one lives in Louisiana all year long and works in another state, they are still liable for Louisiana state income taxes. One thing Louisiana does have going for it in this respect is if a person lives in Louisiana 12 months out of the year and incurs an income tax liability in another state, Louisiana allows that individual to use taxes paid to another state as a non-refundable credit against Louisiana income taxes. Example, if I have to pay $2000 in taxes to another state, and my Louisiana income tax liability is $3000, I can take what I paid to the other state and will only owe Louisiana $1000. Since the credit is non-refundable, there isn't a chance of getting money back that way. If I say owed $3000 in income taxes to Louisiana and my liability to another state was $4000, my Louisiana state income tax liability would be 0$ since I paid more to another state than I owed Louisiana.

I don't know how other states with income tax treat income taxes paid to other states, but I do know my own. If I won a lottery in another state and owed taxes to that state, I could credit it towards my LA income tax. There are probably some states where I'd get double dipped, but to me it looks like Louisiana isn't one of them.

What I'd probably if I won enough to be set for life is move to a state with no state income tax, so I wouldn't have to give away any more than I had to every year.

PrisonerSix

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If you're going to bet on the lottery, or any other ganbling event, you should start planning/researching your strategy now - not after you win.  (If you don't plan on winning, why play?)  It may be too late if you wait.  Most people plan on how to get to work every day, but never give a second thought about a multi-million dollar increase in their lifestyle - even though they spend money to win.

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If you're going to bet on the lottery, or any other ganbling event, you should start planning/researching your strategy now - not after you win.  (If you don't plan on winning, why play?)  It may be too late if you wait.  Most people plan on how to get to work every day, but never give a second thought about a multi-million dollar increase in their lifestyle - even though they spend money to win.

I have something of a strategy planned.  I'll probably relocate to somewhere nobody knows me, buy a nice, but not too fancy house, new cars, etc., and just enjoy life.  I also plan to operate on cash as much as possible, don't want anyone trying to track down who I am or what I have.  I don't plan to be a Jack Whittaker.

I also plan to claim it anonymously through a trust or a corporation, using an attorney to represent me in collecting the ticket.  Another thing I also plan to do is not quit my job right away until after the excitement dies down.  If I all of a sudden quit after a big win, it will raise a red flag.

If I hit the big jackpot, I'll probably relocate to a quiet place, preferably one with one state income tax, to live life in peace.

PrisonerSix 

 

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If you're going to bet on the lottery, or any other ganbling event, you should start planning/researching your strategy now - not after you win.  (If you don't plan on winning, why play?)  It may be too late if you wait.  Most people plan on how to get to work every day, but never give a second thought about a multi-million dollar increase in their lifestyle - even though they spend money to win.

I have something of a strategy planned.  I'll probably relocate to somewhere nobody knows me, buy a nice, but not too fancy house, new cars, etc., and just enjoy life.  I also plan to operate on cash as much as possible, don't want anyone trying to track down who I am or what I have.  I don't plan to be a Jack Whittaker.

I also plan to claim it anonymously through a trust or a corporation, using an attorney to represent me in collecting the ticket.  Another thing I also plan to do is not quit my job right away until after the excitement dies down.  If I all of a sudden quit after a big win, it will raise a red flag.

If I hit the big jackpot, I'll probably relocate to a quiet place, preferably one with one state income tax, to live life in peace.

PrisonerSix 

 

Sounds to me like youi are planning on winning a jackpot, then living your life in fear of discovery.  You'll be rich and can afford to go public.  Look at the Fortune 1000.  None of them hide in secluded place.  As soon as the puiblicity dies down, you'll be like every other millionaire out there - and there are a lot of them.  Until then, hire a dozen rent-a-cops to keep the beggers and petty criminals at bay.  Caring cash is not the answer.  You'd have to have dozens of suitcases full of money.  Unless your goal is to live in nothing but Motel 6 and your farthest travel will be the Ozarks.

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