Ask Questions, Get Answers
Asked by kathycunningham - 4 years ago
this is a authentic assessment i need to do for school.
All Answers
Sort By
eyeBme Level 14 / Hospitality Coorinator
Answered 4 years ago
Lottery winnings are taxable
•Whenever the Powerball or other lotteries are pushing record dollar payoffs, people buy tickets in droves. Although the chances of winning the lottery are infinitesimal, it doesn't stop thousands of people from buying tickets and a handful of people from winning. When one wins the lottery, the gigantic number displayed as the grand prize will never be the actual amount received by the winner. Lottery winnings are subject to federal income tax, and considering the size of most lottery winnings, the federal tax is usually pushed to the maximum level, at around 40 percent of the winnings. In addition to federal taxes, states may require additional taxes on lottery winnings, which can push the tax over 50 percent in some cases. While the amount remaining after taxes is still a sum that most individuals would never be able to attain otherwise, lottery winners often attempt to find ways to lessen or evade taxes. To determine the exact tax rate for lottery winnings, one must find out what the tax rate for lottery winnings in their state is and add that number to the federal tax rate appropriate for their income level, factoring in the lottery winnings.

see more reading
Read more: How Does a Lottery Winner Determine Taxes? |
Compliments from
Gumboy Level 55 / fun guy
Answered 4 years ago
Viewing the two ways to go on this:

For a lump payment you will be giving away 1/2 of it to your state
of residence, leaving $7.5 M. I think the Federal tax is applied after
and not before that. Taking from your $7.5 M of 39.9% of that,
leaves you with $7.5 - 3 M (FICA) = $4.5 M to keep! This all means
that for a lump sum adjustment, they will be taking 70% in total.

For a yearly payment you are only going to get 1/2 of the $15 M
anyway, and spreading over 30 -years (It used to be over 20 but not
enough winners were dying off, as payments will stop when the
winner deceases, dies!) So $7.5 M divided by 360 payouts gives
you a new yearly income (not counting what is added if you should
keep a job after winning) a sum each month of $20,833.33, not bad!
$20,833.33 x 12 nets you $250,000 per year taxable income. See
tax schedules for Fed./ State tax rates.

Find out more, as taxes vary from state to state -
Google [ Fed taxes on lottery winnings ] us advanced search to sort
by date, pick " one year " to get the most recent tax information,
and find your home state on the page lists that comes up.
on the page list.
Compliments from
JoeRyan Level 9 / Union Advocate & Negotiator
Answered 4 years ago
You will pay 10% on the first dollar on up to 35% on the last dollar. by federal tax bracket . So lets just call it between 33% and 35% on the total or a bit over $5,000,000.
Compliments from
Richard Level 79 / Retired Dentist
Answered 4 years ago
It can not be figured without more information. Maybe that is part of the lesson.
You can deduct any state taxes you owe and that depends on the state.
You also have to know how much other income you have. You also have to know if the AMT is applicable.

A rule of thumb is to figure 50%.

There are ways to take the winnings to lesson the tax bite.
The maximum federal tax would be $5,925,000 obtained by multiplying $15,000,000 by the highest federal rate.

Please remember to select a best answer button.
kattmanndawg Level 27 / Here's My 2¢ Worth..
Answered 4 years ago
The taxes on state lotteries work the same as early withdrawals of pensions and 401k.. It's a one time charge (lump sum) of (usually) 35% separate from earned income.. Once paid they can not re-tax on the principle but can on any interest accrued each year (same process) AND you must keep close and separate records in order not to be audited every time you turn around so, hire a cpa.. You'll be glad you invested your money in this other wise hair pulling anxiety.
Sparky5458 Level 63 / Retired Golfer
Answered 3 years ago
$4,500,000.00 Is the closest I can figure out.
Related Questions
Need Answers Instantly?
About this Question
Open Question
2 Compliments
6 Answers
Question Discussion
from funyunsnotonions 3 years ago
can you send me 10,000? :]
from Richard 4 years ago
Additional Links