I won a good prize in the georgia lottery, but if I cash the ticket in, the lottery office will deduct 33% of it to taxes and that's too much. Is there a way I can get around it and pay less taxes. I thought to get my grandpa who 91 to cash the ticket. Since he's a veteran could he be tax exempted ?
NOTE: The best answer will be rewarded $5,000. A check will be sent to his/her mail address. I mean it, if I say it I do it.
Thanks in advance.
2006-10-14 06:10:43 · 14 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
check your email
2006-10-14 06:41:53 · answer #1 · answered by LovelyJess 1 · 1⤊ 0⤋
There are some very dangerous answers that have been posted. For example, you cannot use a 1031 exchange to avoid tax. That only lets you exchange like property for like. So if you had real estate you could sell it and buy another property and roll the otherwise taxable gain into the new property. You cannot do that with a lottery ticket.
The best thing to do is to accept the prize and the 33% deduction. You will get a W-2G at the end of the year. It is just like a W-2 from your job and should be reported on your tax return. If your tax rate for the year is less than 33% you will get a refund (all other things being equal).
As to what you do with the money afterwards I always say "Never let the tax tail wag the commercial dog." Think of it like this: If someone offers you $1,000 tax-free or $5,000 which comes with a tax bill of $2,000, which are you going to accept?
Paying as little tax as possible is not what matters. The amount that goes into your pocket and stays there is.
2006-10-15 04:55:55 · answer #2 · answered by skip 6 · 2⤊ 0⤋
Find out if you can create a business of your own and find out what type of business you could start that would be considered tax exempt. Perhaps you can tell the lottery office this money is being used for a business start-up. I don't know if that might reduce the tax amount you would have to pay, but it would be worth looking into.
Another suggestion would be find tax shelters that are exempt places to put the money.
Other options would be like you mention getting someone you know that is eligible for a tax exemption to cash the ticket for you. Or perhaps you can speak to the controller of the company where you work and find out if they have any suggestions for you. I'm not familiar with the american tax standards so speaking to your financial institution or a financial planner might also be a good idea as they could probably advise you on the best way to get around paying the 33% tax to the lottery office, or give you ideas on how you can reduce the tax payable.
Good luck I hope this helps.
2006-10-14 06:33:41 · answer #3 · answered by ne_patriots2005 4 · 0⤊ 0⤋
Do you have kids? Particularly college-aged ones? Even if you don't, maybe you know someone you trust that's around that age? If you let them cash in the ticket, it will count as earnings... but if they don't work, this will be their only income and they should be taxed at a very low rate.
You could also try setting up a business as a separate tax entity, so the business pays the tax at a much lower rate than you would (since this would be the business' only income).
2006-10-14 06:40:29 · answer #4 · answered by Jason M 2 · 0⤊ 0⤋
The state is going to deduct 33% regardless of your tax status. When you file your taxes, you might get a refund depending on your tax status, but the state is not going to let you out of that deduction no matter who cashes it or what they say. Sorry.
2006-10-14 06:18:53 · answer #5 · answered by Anonymous · 0⤊ 0⤋
... if its $500, he won't be giving out $5000, will he... think before you type stuff.
It ultimately depends on how much the ticket was. If you were to stop working, and it was under like 30,000, then it might be tax exempt. The only thing I could think of is to cash it in, maybe, after April 15th?
2006-10-14 06:19:05 · answer #6 · answered by Anonymous · 0⤊ 0⤋
If you have no wins, you cannot offset losses on your taxes. Even if you do, very difficult to claim losses on lotteries with just the tickets as the IRS knows that you can pick up failed tickets from the garbage.
2016-05-22 01:37:45 · answer #7 · answered by ? 4 · 0⤊ 0⤋
Donate the UNCASHED ticket to a qualified charity. I don't know if you can claim a charitable deduction, but you won't pay the taxes. Of course, you won't have the money either.
2006-10-14 07:25:14 · answer #8 · answered by STEVEN F 7 · 0⤊ 0⤋
Take the money and place it inti a 1031k it will allow you to shelter the funds but only 180 days I use this all the time with my real estate. Invest in real estate I use this to shelter and always buy when there is blood in the streets. Ideas would be Camden J.N. Portsmouth Virginia I own in both areas and each year they increase in value I made a straight up made 310% profit in 12 month in an area called Ocean view, Norfolk VA. I should have kept that one by now it would be worth over 1 million. I wish you the best of wishes and good luck.
2006-10-14 06:27:40 · answer #9 · answered by Barry G 5 · 0⤊ 4⤋
sorry to say that no matter who cashes in the winning ticket. the taxes will be the same. there is no way around it.
2006-10-14 06:20:35 · answer #10 · answered by sea_sher 5 · 0⤊ 0⤋
You can claim your losses against your winnings. This includes lotteries. Just hold on to your tickets.
If the winnings are indeed sizeable then you should be looking for a tax attorney.
http://www.bankrate.com/brm/itax/tips/20010131a.asp
2006-10-14 06:30:15 · answer #11 · answered by $Sun King$ 7 · 0⤊ 0⤋