How much $ is taxed on winnings if you hit the jackpot for $1 million and up? I heard that it could be anywhere from 30% and up. I remember a woman who lives in Michigan hit the jackpot for $75 million on November 14 and she was double taxed. After taxes, she took home about $30 million which is about 40% of the jackpot winnings. Why was she double taxed and is this fair? How is this determined?
2007-02-10 05:51:48 · 6 answers · asked by Nate 5 in Business & Finance ➔ Taxes ➔ United States
Lottery proceeds are taxed just like any other income. It is considered ordinary income as such no preferential rates apply (LT Capital gains, or qualified dividends). You get so little because lottery winnings are based on an annuity - in other words you get 75 Million over 20 years. There are formulas that work out the cash proceeds to present value. That's how much you get if you take all the money up front. You pay tax as the proceeds are received. Some states do not tax the earnings on their lotteries, in those states (NJ) you only pay Federal tax.
2007-02-10 06:04:53 · answer #1 · answered by smh60437 3 · 0⤊ 0⤋
She wasn't double taxed as this is illegal per the constitution. She simply paid ordinary income which is about 40%. When a lump sum is given, usually you do not get the full amount of the purse. If you get $ 1 million, you may only get $900K which is taxed at 39.8%. The winner gets $541800 free and clear. Remember, the rich pay more taxes than the average person.
2007-02-10 06:02:44 · answer #2 · answered by dirkdiggler9999 5 · 0⤊ 0⤋
When you win money above 600.00 you have to pay taxes.The tax on a high amount is classified a luxery tax and can be 40 to 60 percent based on the amount won,the only way to cut down the taxes is to take it in a 20yr payment plan.The taxes are always going to be higher,if you take a lump sum settlement.
2007-02-17 05:08:20 · answer #3 · answered by Clyde M 1 · 0⤊ 0⤋
The government likes to tax everything, while pretending to be cutting taxes. You win the lottery in America, and they will take a chunk of cash off you long before you ever see your prize. Which to me is tantamount to false advertising.
2016-05-25 02:48:00 · answer #4 · answered by Lauren 3 · 0⤊ 0⤋
I think it's supposed to be no more than 30% or something like that, and I think that's both federal and state tax combined.
2007-02-10 06:00:20 · answer #5 · answered by Anonymous · 0⤊ 0⤋
IS IT FAIR THEY GET THEIR MITTS ON ANY????? sorry i don't know the answer to any of your questions, but it bugs the hell out of me........
2007-02-10 06:01:06 · answer #6 · answered by brown eyes 4 · 0⤊ 0⤋