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
Ten Tax Tips for Individuals Selling Their Home
Ten Tax Tips for Individuals Selling Their Home The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.…
Multitasking – Productivity Killer Or Time Saver?
Multitasking – Productivity Killer Or Time Saver? Multitasking can simply be defined as the ability to do more than one thing at a time. I often ask at my workshop if anyone in attendance prides themselves in being a great multitasker. This question is usually met with a few enthusiastic hands up. To be truthful,…
Steps to Prepare for Retirement
Steps to Prepare for Retirement U.S. Companies Can’t Continue Offering Adequate Pensions, AICPA Survey Reveals by Joel Allegretti April 27, 2006 The vast majority of CPAs serving as corporate CEOs, CFOs, Controllers and in other executive positions believe American companies can’t continue providing pensions that adequately cover their employees’ retirement years, according to the results…
Understanding the Importance of Time Management
Understanding the Importance of Time Management By Victor Ghebre Updated: 12/12/12 One of the most non-renewable resources most of us have in our lives is time. No matter how hard we work or how much we strive to accomplish time is always our enemy. However, learning to get a handle on time can be one…