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Need Your Opinion Do You Think They Tax you again after you get the check

Jani Norman's avatar - fiftyways
Jani Norman

Pick 5 Winner in Cincinnati

Friday, January 25, 2013
CINCINNATI - A resident of Hamilton County won after playing the Ohio Lottery’s Pick 5 game. Ethel Martin won $50,417 for betting one dollar straight and boxed on 1-5-9-2-3 in the January 16, 2013 evening draw.
After mandatory federal and state taxes totaling 29 percent are withheld Martin receives a check for$35,796.
was wondering if they took out the 29 percent, gave you the check would you have to pay taxes again when you file again at the beginning of the year????????
mightwin's avatar - questns
mightwin

Depends on the person's income bracket.

Avatar
PrisonerSix

In my state, Louisiana, the lottery will withhold 25% for federal income tax and 5% for state income tax. If the jackpot pushes the winner into a higher tax bracket, they'll most likely have to pay more taxes on the money they already receive through work or other sources, so it is possible to owe more even with the money held back from the jackpot.

maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
maringoman
In response to Jani Norman

2013 Tax Brackets (for taxes due April 15, 2014)

Tax rateSingle filersMarried filing jointly or qualifying widow/widowerMarried filing separatelyHead of household
10%Up to $8,925Up to $17,850Up to $8,925Up to $12,750
15%$8,926 to $36,250$17,851 to $72,500$8,926 to $36,250$12,751 to $48,600
25%$36,251 to $87,850$72,501 to $146,400$36,251 to $73,200$48,601 to $125,450
28%$87,851 to $183,250$146,401 to $223,050$73,201 to $111,525$125,451 to $203,150
33%$183,251 to $398,350$223,051 to $398,350$111,526 to $199,175$203,151 to $398,350
35%$398,351 to $400,000$398,351 to $450,000$199,176 to $225,000$398,351 to $425,000
39.6%$400,001 or more$450,001 or more$225,001 or more$425,001 or more



Lets suppose Martin is a single filer and earns $35,000 a year. At this point his tax rate is 15%.  Now that he won $50,417 his income bracket moved from 15% to the upper tax bracket of 25% because his income is suddenly $85,417.

25% of 85,417 = $22,354.25. If he has payed income taxes less than $22,354.25 during the whole of 2014 then he will owe IRS the difference. If he has payed more than $22,354.25 then he will get a refund of the difference. Correct me if I'm wrong 

Jill34786's avatar - Lottery-006.jpg
Jill34786
In response to maringoman

I will go with the assumption that Ethel Martin is single to be simplistic. Using a salary of 35k and the winning ticket of $50,417, her gross income would be $85,417 and the AGI(adjusted gross income) would most likely be substantially lower after deductions/exemptions but I will use the $85,417 for this example. 

The 25% rate is applied from $36,251 to $85,417 incurring a tax of $12,291.50

The 15% rate is applied from $8,926 to $36,250 incurring a tax of  $ 4,098.60

The 10% rate is applied from 0- $8,925 incurring a tax of $892.50

Total tax due would be $17,282.60

The example above is hypothetical and in reality the tax liability would be much lower after deductions and exemptions are factored in.

mikeintexas's avatar - h87TsB4
mikeintexas

IF I ever win the lottery, I'm going to PM a few of the good folks on here to let them know of my good fortune, then I'm going to send a msg. to Jill and ask her how much she'd charge for financial advice.

savagegoose's avatar - ProfilePho
savagegoose

to find the effective tax rate, divide the amount paid by the total earned

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Jill34786's avatar - Lottery-006.jpg
Jill34786
In response to Jani Norman

Without knowing her filing status or income it is impossible to determine whether Ethel will owe additional taxes. If she is employed and makes over $100k there is a good chance she may owe a little bit more in taxes, any income less than that and she would most likely receive a refund once deductions/exemptions/credits are factored.

Avatar
Shelby Mustang

Whether they did or not I'd still set some money aside for the "JUST IN CASE " scenario. Cause there are 2 things in this country that's inevitible DEATH and TAXES. And I believe it's actually easier to escape DEATH LOL

Avatar
Stack47
In response to Jani Norman

The Ohio tax rate was 5.5% in January 2013, they always withhold a flat 25% for prizes over $5000 so 30.5% should be withheld. Depending on other income, the 25% Federal tax withheld should cover those taxes. I'm not sure about the state tax because the rate changed to 5.75% in September 2013 and again it depends on other income and deductions.

If the $50,000 was her only income, the Federal tax is about $6000 for a single filer so she may even get a refund.

Drenick1's avatar - villiarna
Drenick1

Thank you for the breakdown Jill!

Artist77's avatar - batman14
Artist77
In response to mikeintexas

Me too!

psykomo's avatar - animal shark.jpg
psykomo
In response to Stack47

STAK:

can Yo work out something simple??????????and post it 2D bottom line 2 explain!!!

It appear's UR an accountant therefore, U must be able 2 give us an EXAMPLE: ???!

(a) Ohio tax rate based on sum (b) something, depending on income?>>>>>>>!!!

thank U STAK:

U have served LP member'ssssssssssssssssssssssssssssssssssssssss>>>WELL!!!!

so she may git a refund>>>>>>>>>>>>>>>>>>>>>>>>>>>>THANK GOD!!!!!

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