me and friend wants to know how do you know how much taxes you will pay on a lotto winning?

Answer 1

52%

Answer 2

First, it depends on the country. Some countries make lotto winnings tax-free. The USA does not.

Normally, the taxes are witheld at 27% for the Federal, but if it's a big enough winning some of that money will be in the 33% bracket.

Then, there's the state income tax, which varies from zero (TN, TX, FL, NV) to 13% (CA)

Also, remember that many of the big lotteries advertise the amount you'd get on a 20-year annuity.
A $20,000,000 jackpot is not $20M up front, it's $1M a year for 20 years. The lottery company only has about $12M cash on hand for the winner, the other $8M is anticipated interest on the money the lottery invests.

So if you win a "$20,000,000 jackpot", you really only take home a check for about $7,500,000.

Personally, I think that's false advertising, but Congress has other things to worry about.

Answer 3

It depends on your income tax rate. If it's 28%, that is what you end up paying at the end. However, if you win for more than so many dollar amount, the lottery officials will withhold, I think, 40% or more and pay tax on behalf of you. At the end of the year, you will report the income from the winning and the tax paid with everything else like your salary. You will probably get some back.

Answer 4

The federal tax will depend on your total taxable income for that year, including the lotto winning, and can be as high as 35%.

There might also be state tax, depending on where you live. Amount varies by state. Some states don't have a state income tax, and some states exempt winnings from their state lottery from state income tax.

Answer 5

I think it varies from State to State, but I found this on the internet.

Q - Will there be any taxes withheld from my winnings?

A - Taxes are withheld for any winnings over $5000. There is a federal tax of 27% and a state tax of 5% for a total withholding of 32.5%. Additional federal income taxes may be owed depending on the individual winner's tax bracket.

Answer 6

Look at last years tax instructions (irs.gov), in the tax tables. Add your share of the winnings to your other income for the year and see what your taxes would be.

The amount they withhold might be more or less but when you file your taxes you will settle up.

Your total tax liability will likely be a lot less if you receive the payout over several years instead of all at once.

Answer 7

Is'nt it tax free? you only pay tax on the income from it not the capital (thats the way it works in the u.k)