If you won the lottery or who wants to be a millionaire or the amazing race, etc. is it true you would owe 50 percent to the U.S. government as tax...?
2006-12-11 15:12:29 · 29 answers · asked by kewtber 3 in Business & Finance ➔ Taxes ➔ United States
It is true that if you gave me 50% of the winnings, you would become my best friend and love of my life! :-P
But, no. It's not true. It would be taxed at whatever tax bracket you are in.
Say you got the full million in 2006, then you would be taxed at 35% of it.
Say you got $250k each year for the next 4 years. Each year the $250k would be taxed at an effective rate of about 28%.
How much the IRS taxes on the $1million really depends upon how much of it you get each year.
Finally, if this is lottery winnings, your state may not tax you on it at all. Some states do not tax you on lottery winnings from your own state, but if you won a different state's lottery, your home state does tax you on it.
2006-12-12 14:29:02 · answer #1 · answered by Anonymous · 0⤊ 0⤋
No, the maximum rate is 35%, and unless you're already in that bracket, some of it would be taxed less than that.
State tax, even in expensive states, wouldn't take that to 50%. And in most states, if the win is on the state lottery, the state doesn't take tax from it. If the win is from Vegas gambling though, state tax would enter in, with the amount if any dependent on the state of residence.
2006-12-11 17:35:54 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
If you WIN money, it is taxed at a different rate than your income. This goes for all types of winnings that you mentioned, and yes the rate does get pretty close to 50% even if your "real" income places you into a lower tax bracket. Taxes are similar for bonuses that you get from an employer. Not quite as high, but much more than normal earnings.
2006-12-12 12:43:55 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It will, I think, count as income and be added to your yearly income, and then you will be taxed according to your new bracket. So a welfare person would thus get to keep a bit more, and someone who was already rich perhaps not so much.
I say, win it first and then worry! Except, you know, lotteries are just a tax on the stupid anyway...
blessings,
cryllie
2006-12-11 15:33:15 · answer #4 · answered by cryllie 6 · 1⤊ 0⤋
I believe its something around 40%, because when you get that money., it's not income at the time, I has something to do with a federal gift tax. Then the remainder- goes onto your income, for when you file your taxes at the end of the year.
2006-12-13 04:00:42 · answer #5 · answered by jgrover175 1 · 0⤊ 0⤋
not 50%, but yes, a certain amount of your winnings go to the United States Government in the form of taxes. although, you do still get a LOT of money
2006-12-11 15:14:47 · answer #6 · answered by Danny K 2 · 1⤊ 0⤋
The government would take about 38% in taxes. Special rule applies to bonuses and lottery/casino winnings.
2006-12-11 15:15:37 · answer #7 · answered by Anonymous · 0⤊ 1⤋
It could actually be a little more than that. My friend's wife got a buyout from a bank for 2 million and they only got to keep $900,000 of it. The idea is to find as many tax breaks as you can - many of them being things where you can incorporate yourself and invest in something that makes money with the money you win, such as rental properties, etc.
2006-12-11 15:15:02 · answer #8 · answered by It's Me 5 · 0⤊ 2⤋
it is true that the gov. gets a large percentage from taxes but it doesn't win 50%. close to that but i think it is somthing in between to 25%-45% or somthing. sucks doesn't it?
2006-12-11 15:21:25 · answer #9 · answered by me, myself and I 3 · 0⤊ 0⤋
No , the maximum tax rate is less than 50%.
2006-12-11 15:14:37 · answer #10 · answered by sm4125 3 · 1⤊ 0⤋