A Lottery Question

C

ChoppedLiver

New member
Let's say you won a big lottery prize on Jan. 1. And you took a lump sum.

Now, the lump sum is (X) and the Feds. take their 39.6% off of that.

Let's pretend that (X) - 39.6% = $100,000,000.00 (And if you live in a state that doesn't tax the lottery [there are 10], the 100M is what you net.)

Now say you were somewhat frugal and just kept $100,000.00 for "fun $$$" and put every penny of the rest in tax deferred investments of some form.

So, in a hypothetical scenario like that, the question is...

When you do your taxes for the year you won, would you get a return from the Feds from the 39.6% they took out minus the taxes you would have to pay on the $100,000.00 you took out as "income" that you pocketed?

It USED to be that the Feds. took 20% (later bumped to 25%, I believe) and that was it, no return of their "share". The only further tax liability you had was on the money your money made you over the years. I believe it was Obamacare that changed that and put big lottery winnings in the highest tax bracket. And, if that is the case, I believe you should get a tax return from the Feds. if the hypothetical scenario above was followed.

Anyone know?
 
Celticguy said:
Why would you get a refund ?
Presumably for your standard or itemized deductions.
Click to expand...

Because you got a paycheck.

And, like any other paycheck, it gets taxed.

And if you invest your net pay, you get tax benefits, lowering your actual income for tax purposes.

Why should a lottery tax be any different?
 
Ok...so you just won a net hundred million dollar that you did not produce and you're worried about a tax refund?

So what else do you do for fun? Torture small animals?

Do what any other sane person would do. Don't worry about it. Go hire a tax attorney and go have some fun. :)
 
If you outright paid the tax rate, and no other complications, you would be entitled to a refund for your deductions. Generally you would deduct your deductions prior to paying, so you would generally not get a refund.

If you had been a salary worker and paid taxes, you might get a refund on that, if you were overpaying.
 
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