Believe it or
not, with a few exceptions, you'll probably be paying taxes on your winnings. This
depends upon your nationality, and which lottery you are playing.You are subject to the tax rules where you live, and
taxes where the lottery is being held, if it is different from where you live. US
citizens are subject to taxation on all World income, including gambling wins.
This simply means that a US citizen will be
taxed on all lottery winnings of $600 or more. Canadians are generally highly taxed
in their daily lives, but their lottery winnings are not subject to taxation. This
can lead to some very significant prizes. Check with your local authorities and tax
accountants if you have questions specific to your area.
Many world lotteries pay out the actual
amount won, all at once. This is a radical idea for US-based lotteries, which generally
pays out their grand prize winners at 50% of the advertised gross jackpot, or in payments
spread out over 20 to 25 years.
On the subject of taxation, you can rest
assured that no US-based lottery will pay out any winnings without first deducting the
taxes due on those winnings - usually, a full 38%.
There is no exception. US lottery
winnings are taxable, as are ALL lottery wins over $600, anywhere in the world, if the
player is a US citizen.
There are notable exceptions to the taxation
rule, particularly with the Canadian lotteries. All lottery payments are in cash,
with no deductions. These winnings are not taxable in Canada if you win on this
lottery. There is no further liability for any amount, and you actually get 100% of
the prize amount that is forecast.
If a Canadian wins the Canadian lottery, the
funds are given to the winner in cash, with no tax liabilities ever. If a US citizen
wins the Canadian lottery, they would also be given the winning amount all at once,
without any tax liability in Canada. But as we stated, the US tax code requires you
to list this win on your income tax form, and to pay the associated taxes.
A US citizen who wins a huge bundle, and
whose identity is not even reported to the US tax authorities, is nonetheless required to
report their winnings, and submit their taxes. People have moved to a tax-free haven
for considerably less than this.
Care to get your money and disappear in to
the Bahamas or somewhere that is not in the US in order to get around paying $10,000,000
or more in taxes? While this is not recommended because it will lead to indictment
and prosecution should you return to the US or any protectorate, stranger things have
happened.
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