The contest had four winners, who tied, each getting 25% of the $8 million-plus pot.
The maximum federal tax rate, which they will all qualify for, is 37%. Of ALL of it.
Who's the big winner?
The contest had four winners, who tied, each getting 25% of the $8 million-plus pot.
The maximum federal tax rate, which they will all qualify for, is 37%. Of ALL of it.
Who's the big winner?
Originally posted by: Kevin Lewis
The contest had four winners, who tied, each getting 25% of the $8 million-plus pot.
The maximum federal tax rate, which they will all qualify for, is 37%. Of ALL of it.
Who's the big winner?
The 4 who won the contest are the "real" winners. Everyone who gambles knows that the IRS will siphon off a large percentage of any large gambling win. It is unfortunate but it is the reality. Ask those 4 people if they consider getting approximately $1.25 million dollars for their $1000. entry fee as a win - or a loss. They were and are "big" winners even after the IRS takes the 37%.
Even after paying state taxes in my state on top of the federal taxes, a $1.25 million win would be around $750,000 after all taxes. On a $1,000 investment, that's a "decent" return. Two million would yield around $1.2 million, which would be alright.
I never understand how people can say they'd be better off not hitting these massive amounts. Just give me a chance at it and I won't regret it.
I play small but SOME day...... I would love to get a 1099. Complain about the taxes...... you're still farther ahead winning $2000 w/taxes than $1000 (tax free).
Originally posted by: Raymond
Even after paying state taxes in my state on top of the federal taxes, a $1.25 million win would be around $750,000 after all taxes. On a $1,000 investment, that's a "decent" return. Two million would yield around $1.2 million, which would be alright.
I never understand how people can say they'd be better off not hitting these massive amounts. Just give me a chance at it and I won't regret it.
No one ever says that. What they say is that you'll lose almost half of your wonderful jackpot to the tax man, which makes it a lot less wonderful.
Your calculations are a bit optimistic, since you would pay the feds alone the maximum rate of 37%. Then on top of that, you'd need to pay the maximum state tax rate. (The Trump tax swindles of 2018 included an elimination of the right to deduct state tax liability from federal taxes.) Most state tax rates top out at 10 or 11 percent. So you get to keep about half of your winnings.
While one million dollars is still a lot of money, I doubt that many people would be happy winning two million dollars and then having half of it taken away.
Originally posted by: Neal Robertson
I play small but SOME day...... I would love to get a 1099. Complain about the taxes...... you're still farther ahead winning $2000 w/taxes than $1000 (tax free).
Gambling winnings should not be taxed at all, unless you're allowed to fully deduct gambling losses. Win a million this year, pay the gummint(s) half a million. Lose a million next year, don't come crying to us.
Grossly unfair.
Originally posted by: Kevin Lewis
No one ever says that. What they say is that you'll lose almost half of your wonderful jackpot to the tax man, which makes it a lot less wonderful.
Your calculations are a bit optimistic, since you would pay the feds alone the maximum rate of 37%. Then on top of that, you'd need to pay the maximum state tax rate. (The Trump tax swindles of 2018 included an elimination of the right to deduct state tax liability from federal taxes.) Most state tax rates top out at 10 or 11 percent. So you get to keep about half of your winnings.
While one million dollars is still a lot of money, I doubt that many people would be happy winning two million dollars and then having half of it taken away.
People also ask-- Can I deduct my state taxes on my federal return? -- You may deduct as an itemized deduction, state and local income taxes withheld from your wages during the year (as reported on your Form W-2, Wage and Tax Statement) and estimated state and local income taxes and prior years' state and local income taxes paid during the year.-------What taxes are deductible on federal return? Income, sales, real estate and personal property taxes. Losses from disasters and theft. Medical and dental expenses over 7.5% of your adjusted gross income. Miscellaneous itemized deductions.
It's possible that some (or all) of the winners were able to deduct more than it seems. Since cartels of seemingly unrelated entries are always, in contests like these, purposefully coordinated in an economy-of-scale way to dominate the events, the questions arise:
1) If the contest entries are indeed part of a coordinated effort that is "on the books," such as an LLC, does the contest sponsor have any need or motive to disqualify the winning entries coordinated in that way? In other words, does a particular casino mouthing certain rules necessarily result in them applying those rules? I suspect the answer is a resounding "no."
2) If the speculation in (1) is correct, then one could deduct the costs of the non-winning entries, which might be considerable.
I bring this up simply because it wasn't previously mentioned and because some of the folks who "won the money" have been (allegedly) involved in other cartels in other high-priced contests of this type.
In other words, if you're not clearly the biggest dog in the fight, the savvy thing to do is not be in the fight. Otherwise, you're donating as much as competing.
Originally posted by: Robert Dietz
It's possible that some (or all) of the winners were able to deduct more than it seems. Since cartels of seemingly unrelated entries are always, in contests like these, purposefully coordinated in an economy-of-scale way to dominate the events, the questions arise:
1) If the contest entries are indeed part of a coordinated effort that is "on the books," such as an LLC, does the contest sponsor have any need or motive to disqualify the winning entries coordinated in that way? In other words, does a particular casino mouthing certain rules necessarily result in them applying those rules? I suspect the answer is a resounding "no."
2) If the speculation in (1) is correct, then one could deduct the costs of the non-winning entries, which might be considerable.
I bring this up simply because it wasn't previously mentioned and because some of the folks who "won the money" have been (allegedly) involved in other cartels in other high-priced contests of this type.
In other words, if you're not clearly the biggest dog in the fight, the savvy thing to do is not be in the fight. Otherwise, you're donating as much as competing.
To answer 1), the casino/sponsor doesn't have the power to nullify, or to require, any agreements between or among the various contestants. And even if they tried to have such power, there's no way they would find out. So, hell no.
2) "One" could not deduct the costs of the losing entries, unless the "one" in question was a licensed business entity. An individual couldn't do that unless he filed as a professional gambler. Even a consortium, though, would have trouble getting the IRS to believe in its legitimacy if it hadn't existed prior to the contest and doesn't exist after whatever winnings are distributed.
I've heard anecdotally that people who win contests, tournaments, etc. and have sold "shares" or are part of a betting consortium have a royal stone cold bitch of a time convincing the IRS that their true winnings were a fraction of the actual total first prize.
