Taxes and the Big-One

Reply #16

RJOh — Thu, 12 Feb 2015 22:07:47 GMT

I have the feeling that a lot of people don't realize that reducing their taxes will mean there's less money in their pocket, too.

Maybe that the reason some million dollars plus prizes go unclaimed, some people would rather have nothing than have to pay out 30% of it in taxes.

Reply #15

RL-RANDOMLOGIC — Thu, 12 Feb 2015 22:00:09 GMT

All I've heard here pertains to loosing. There are options out there that can and will cover the 8% penalty

and still make a big profit. It's no wonder 1% have 99% of the money.

RL

Reply #14

KY Floyd — Thu, 12 Feb 2015 17:58:54 GMT

Next challenge I see would be offsetting those 3 remaining tax quarters with losses

Amen. Who wouldn't want to lose $25 million to get a deduction that will save $10 million in taxes?

I see people talking about reducing taxes by charitable donations or investment losses all the time. With charities you're at least doing somehting beneficial, but I have the feeling that a lot of people don't realize that reducing their taxes will mean there's less money in their pocket, too.... [ More ]

Reply #13

RL-RANDOMLOGIC — Thu, 12 Feb 2015 13:06:27 GMT

I guess that's why they say to talk to a professional tax person before claiming your JP.

On a big JP your going to owe way more than 30%. What a racket.

RL

Reply #12

CDanaT — Thu, 12 Feb 2015 11:42:05 GMT

Interesting RJOH, especially that part about the 4 equal parts of paying estimated taxes, especially if you collected your winnings within the next 4-6 weeks. Obviously you would have to change your career title to gaming/gambling. Next challenge I see would be offsetting those 3 remaining tax quarters with losses or perhaps donations to charities...Of the 14.6% due, you would have to have some pretty shrewd advisers and accountants to make gosh darn sure that the IamGod Redistribution Specialis... [ More ]

Reply #11

Stack47 — Thu, 12 Feb 2015 08:54:47 GMT

I was just making sure when you said Here in MO you can opt out and take the full amount with an agreement to pay the full taxes at tax time. , you were aware of 25% will be withheld for Federal taxes regardless where you live or how you collect. The winner will still owe about another 14% and they can invest that amount until the tax time. The last thing a jackpot winner needs is IRS problems because of creative accounting.

Reply #10

RJOh — Thu, 12 Feb 2015 05:42:24 GMT

You should check http://www.irs.gov/taxtopics/tc306.html

Topic 306 - Penalty for Underpayment of Estimated Tax

The United States income tax is a pay-as-you-go tax, which means that you must pay tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you do not pay your tax or you pay an insufficient amount of tax through withholding, you might also have to pay estimated taxes. If you did not pay enough tax t... [ More ]

Reply #9

RL-RANDOMLOGIC — Thu, 12 Feb 2015 04:14:42 GMT

Stack

I don't want this to turn into a tax class such as filing a W-9 and having a TIN, etc...

I was making a simple observation about the time between the date of the claim until

the deadline for filing on Apr-15-2016. No money is safe even if it's locked away in a safe

cemented into your basement floor, fact is, that 97% of all US money does not even exist.

As for safe investments there is no such thing but the more money you have the safer it

gets. Walk into a bank and tell... [ More ]

Reply #8

Stack47 — Thu, 12 Feb 2015 01:53:25 GMT

Couldn't find any withholding exemptions for pools, syndicates, or trusts on the Forms W-2G and 5754 instructions but I'm positive the Federal tax rules for Missouri are the same as every other state.

If more than one person shares in the winnings from a single wager, the total amount of the winnings (minus the amount wagered) will determine the amount of the proceeds for purposes of reporting and withholding. Do not allocate winnings to each winner before determining whether the withholding... [ More ]

Reply #7

Teddi — Thu, 12 Feb 2015 01:31:31 GMT

I guess the question I would first pose to you is, what investment do you know of that will guarantee you a 5% return for a period not exceeding 12 months.

I'm sorry to say that American Greed is filled with stories of people losing their shirts from guaranteed investments . The guarantee gets them every time.

Escrow accounts get looted, Ponzi schemes get revealed, financial institutions fail, advisors pilfer, insurers lie. Nothing is a guarantee. Some investments are simply a safer risk... [ More ]

Reply #6

mikeintexas — Thu, 12 Feb 2015 01:12:15 GMT

I mentioned that very thing in this November thread: $321 MILLION: Mega Millions jackpot is red hot and KY Floyd had this to say about making money off the difference - 14.6% - between the 25% initial withholding and the total 39.6% due the federal govt. I read up on it some, not wanting to take a single source as gospel and it looked like he was correct. I follow a Forbes financial writer (who has written several articles about the lottery) on Twitter (not that I'm an avid user of that particul... [ More ]

Reply #5

RL-RANDOMLOGIC — Wed, 11 Feb 2015 22:37:05 GMT

KY

When playing in a syndicate or claiming the prize as a trust they can be set up so that each member

receives a full share after filling out the necessary tax forms which makes them responsible for taxes

on the money they receive. As far as investments go there are those with guaranteed returns. When

the annual payment option is chosen the lottery invest the cash value and that's where the annual

payments come from. I could be wrong as things change but that's the way it use to... [ More ]

Reply #4

KY Floyd — Wed, 11 Feb 2015 17:32:02 GMT

Here in MO you can opt out and take the full amount with an agreement to pay the full taxes at tax time.

I'm guessing you've misunderstood something. Maybe only part of it, or maybe the entire concept. Missouri is free to do what they want about withholding state income taxes, but the withholding of federal income taxes is a federal requirement and Missouri can't change that.

Many (most?) states make withholding voluntary for distributions from some investments. In theory, perhaps Missour... [ More ]

Reply #3

RL-RANDOMLOGIC — Wed, 11 Feb 2015 14:39:05 GMT

The extra 5-mill could go a long way in helping others if you not interested in keeping it for yourself.

RL

Reply #2

nina09 — Wed, 11 Feb 2015 14:33:17 GMT

If only good investment were that easy to find.

Reply #1

Shelby Mustang — Wed, 11 Feb 2015 14:14:43 GMT

When the jackpot gets that high I could care less what I paid in taxes, cause whatever I end up with will be waaaaay more than I or anyone of us on this site could ever earn in 2 lifetimes

Taxes and the Big-One

RL-RANDOMLOGIC — Wed, 11 Feb 2015 14:10:08 GMT

Hi all

Lets say that you hit the Power-ball JP tonight. The cash value is listed at $327.700,000.00 and most would

have to pay around 40% come tax-time so the bottom line after taxes would be $196,620,000. The norm is

that they hold out a certain percent when you claim the prize with a disclaimer that you could have to pay more

at tax time.

Here in MO you can opt out and take the full amount with an agreement to pay the full taxes at tax time. Being

that the average up front t... [ More ]