Will Latest Group Lottery Winner Be Affected by Taxes?
There is nothing quite like winning the lottery. In almost all cases lotto winners go from rags to riches overnight. There is definitely a thrill and exhilaration that comes with becoming an instant multi-millionaire. Who wouldn’t want to win the lottery? Hold that thought. Winning the lottery comes with several possible catches that could lead to tax trouble. In fact, for some lottery winners, the tax fallout is a real nightmare.
The tax headache can be especially big when several people decide to purchase lottery tickets together, as a group, which is exactly what happened to some recent lottery winners in Tennessee. Twenty co-workers won a $420.9 million Powerball jackpot in November, with the lump sum payment being $254 million. Split evenly, each winner will receive $12.7 million before taxes.
However, the first question that must be answered is could this group be considered a real partnership? The 20 winners have been pooling their money together for eight years, so it’s a legitimate question. It’s also an important one as it could make a big difference in how they report it and their overall tax bill.
Another question is could their agreement be viewed as a trust? If the IRS considers it a grantor trust it’s simply taxed as a flow-through. However, if it is a more complex trust that is taxed the same as a corporation the tax headache can be huge and expensive. So, what should you do if you become an instant millionaire? If you ever end up choosing the right numbers, the smartest thing to do is talk with a qualified tax professional before you even collect the money. This will help you avoid several possible headaches.
http://www.forbes.com/sites/robertwood/2016/12/01/20-plant-workers-420-million-powerball-win-cleverly-misses-tax-mess/#3a6f0e555f29
Revocable Living Trust: Family Financial Security
Revocable Living Trust: Family Financial Security The times in which we live have brought new uncertainty and increased anxiety to our front doors. With the threat of terrorism and the reality of war, our safety and that of our loved ones are at the forefront of our concerns. For many a continually disappointing investment environment…
Municipal Bonds: A Source of Tax-Free Income
[vc_row][vc_column][vc_column_text]There’s one readily available and legal source of untaxed income that we know of: municipal bonds. These securities are issued by state and local governments, school districts, hospitals and other public agencies to support community projects and services. To permit these worthy endeavors to raise money economically, Uncle Sam exempts the interest that they pay…
Employers Offer Incentives for Weight Loss
Employers Offer Incentives for Weight Loss Looking to get some extra cash from the boss? Forget logging long hours, brokering that big deal or sucking up at the company holiday party. Employer weight loss programs Employers have begun dangling big incentives, such as cash bonuses and paid days off, to encourage workers to lose weight.…
“Values-based” Estate Planning
[vc_row][vc_column][vc_column_text] There are many facets of estate planning. Certainly, it’s important to craft a will that delineates how the fruits of years of hard work will be distributed to your loved ones—fairly and harmoniously. And, of course, crafting strategies that will maximize what you pass on at the minimum tax cost is an important goal.…