Why are lottery winning taxes so much?

13 Answers

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  • kswck2
    Lv 7
    1 month ago

    The lottery is a way of giving a false hope to people that have no clue how to handle money. 

  • Anonymous
    2 months ago

    IN YOUR COUNTRY   Not mine.  So specify which part of the planet you live on.

  • Anonymous
    2 months ago

    They are not taxed in the UK....It's one of the few things that aren't taxed.

  • Jay P
    Lv 7
    2 months ago

    They are not taxed at all ( where I live ).  It's only the earnings from lottery winnings ( for example, you put it in the bank and collect interest on it ) that are taxed as that is now income.

    Whether they are, and at what tax rate, at your undisclosed location is not something I can comment on.

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  • F
    Lv 6
    2 months ago

    It’s tax free in the UK, which I’ve always thought is wrong .You work hard and earn your money and the government takes a load , get it for nothing and it’s tax free.

  • Anonymous
    2 months ago

    Lottery winnings are taxed just like income (if you are in the US).  If you have a big winning (let's say $100k or more), then it's going to push you into a higher tax bracket than you typically pay.

     

    Let's say you make $50k a year and are married.  You get two standard deductions so your taxable income (ignoring everything else) is $26k.  Your Federal income tax is then 10% on the first $19750 or $1975.  Then you pay 12% on the remaining amount or 0.12 * ($26,000 - $19750) = $750 for a total Federal income tax of $2725 (state tax, SS and Medicare would be in addition to this).

     

    When you win (assuming) $100,000, your yearly income goes up to $150,000.  You still get your two standard deductions reducing your taxable income to $126,000.

     

    Now, for Federal tax you owe:

    10% on the first $19,750 or $1975

    12% on $19,751 to $80,250 or $7260

    22% on $80,251 to $126,000 or $10,065

     

    Total Federal income tax = $19,300 or 7 times what you paid when you just make $50k for the year.

     

    Why so much?  Because the income tax in the US is progressive, the more you make, the more you pay as a percentage.  For this year, you are in a much higher tax bracket and you pay more Federal tax as a result.

  • 2 months ago

    They are taxed at the same rates as other income. It seems like a lot because you have to pay them immediately in a lump sum. You can't spread them out over each paycheck. 

  • 2 months ago

    They are taxed the same way any other income (of that amount) is taxed.

  • Vivian
    Lv 4
    2 months ago

    For various reasons, an annuitized jackpot can have a higher cash value than a larger annuity with a lower cash value. List of U.S. lottery drawings of $300 million or more (annuity value) with at least one jackpot-winning ticket (dollar amounts in million).

  • Anonymous
    2 months ago

    nothing is 'free' anymore ..................................

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