if you won a million dollars in the lottery and....?
paid the taxes on it,,,, THEN donate the rest to charity,,, are you able to reclaim it on your tax return?
and get it back...?
- ninasgrammaLv 71 decade agoFavorite Answer
Suppose you had no other income, and the lottery winnings didn't earn any money. Also assume this all happens in the same year.
Let's say taxes were $300,000 and you gave away $700,000. Your income for the year is now $300,000 and you would pay tax on only the $300,000. If the taxes on $300,000 were $100,000, you would get a refund of $200,000.
This would have to be accomplished over more than one year since there are limits to how much can be given to charity, but you are right you would get some of the original taxes back if you gave the rest away.
- STEVEN FLv 71 decade ago
Year deduction for charitable contributions in limited to 50% of your AGGI. Assuming for simplicity that the lottery is your only income, this is my estimate.
Federal tax rate: 35%
Tax on $1 Million: $350,000
Federal tax savings: $175,000
Net taxes: $175,000
This ignores any taxes due at the state and local level.
If you really want to help the charity, just give them the ticket and let them cash it. Then you don't have to report the income of the deduction.Source(s): http://www.irs.gov/pub/irs-pdf/p526.pdf
- fiestyredheadLv 61 decade ago
Well, if you got a receipt for the "donation". Yes, you can claim it as a deductible on your taxes. Will you "get it back?" Nope, not all of it. There are alot of factors to consider when you file your taxes. Your best bet would be to figure out your taxes using the different forms and see what works out to your favor. We do this with the Tax Turbo software. Usually we don't have enough deductibles for it to benefit us so my hubby just claims head of household.
It really depends on your income, and what tax bracket you fall into. You'd have to spend a little time filling in the tax forms and see which way would be most beneficial to you and your family.
- jseah114Lv 61 decade ago
You would only be able to reduce your tax on your lottery winnings if you were to make the charitable contribution in the same year that you won the lottery (or the same year that you received the lottery money if you opted for the payment option and not the cash value option).
Since the charitable contribution is a deduction for income taxes, and not a credit, you would NEVER be able to avoid all your taxes on your lottery winnings. Also, the deduction for charitable contributions is limited to 50% of your adjusted gross income.
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- auntb93againLv 71 decade ago
You can donate the rest to charity, but that will not give you all the money back as a tax refund. The tax on the lottery winnings was capital gains; the tax return on which you deduct your charitable donation is your income tax. You may in fact get all your income tax withholding returned for a charitable donation of that size.
This is all academic, because if you did do this, you would probably have your family in court trying to get you declared incompetent within a heartbeat.
- JudyLv 71 decade ago
Lottery winnings are taxed like ordinary income, and do NOT qualify as capital gains.
If you donate money to charity, no matter where you got it, you can claim it as a deduction, subject to certain limits. So you'd get some tax benefit for your deduction.