Income tax question (winning lottery & taxes)?
If someone won $100 million in the lottery and decided they were never going to work again... after paying income taxes that first year... do they ever have to pay income taxes again?
- BobbieLv 77 years agoFavorite Answer
No taxes on the amount that they would have all ready reported on their 1040 income tax return for that tax year BUT when the after income tax amounts are used to produce other types of unearned income during each tax year then the UNEARNED INCOME amounts that would be received during each tax year would have to be reported on the correctly completed 1040 income tax return and any possible income tax liability amounts that MIGHT be due would have to be paid for each tax year on that income.
Hope that you find the above enclosed information useful. 11/10/2012
- StephenWeinsteinLv 77 years ago
If the person was smart and invested the money wisely, or put it in a back account that earned interest, then the person would have to pay taxes on the investment profits or the interest.
If the person invested badly and lost all the money, then the person would have to work again, and pay income tax.
If the person fell somewhere in between these extremes, and, for example, put the money in a back account that did not earn interest, then the person would not have to pay income tax.
- LadyMadyLv 77 years ago
If the person takes all the money at one time, almost half goes to taxes. If they take a yearly pay out, the money is taxed on just the yearly amount. If I won that kind of money, I would start a foundation that draws interest, pay out to scholarship, charities and other donations. I would collect a stipend from the foundation for administration fees and name family members to the board. Meet once a year to decide who will receive the money to justify the stipends being drawn.That is what I would do but there are financial advisors who could draw plans, making sure that they will not rip you off. It is very difficult these days to find trustworthy folks, out there.
- BarbaraLv 44 years ago
Lottery winnings are taxable! When the Play-4 Lottery sent you form W2-G they also sent notification to the IRS that you received this income. Therefore the IRS will be expecting you to include this on your income tax return as taxable income. This is one area where many people get into trouble with the IRS by not including their winnings as income. The IRS eventually catches it and sends the taxpayer a bill (IRS Notice CP2000) for the difference along with penalties and interest. Just be sure to report it!
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- troLv 77 years ago
for one thing you would pay income taxes when you won it, but if you were wise enough not to spend it all and invested, this would generate further income which would be taxable to you
if you took it in the payments set up, you would file taxes each year on the amount you received
- JudyLv 77 years ago
If they took a lump sum, they'd have paid the tax on that. But if they had it invested somewhere, even just in CD's, they'd pay tax each year on any investment income.
- Anonymous7 years ago
If they deposit the money into a NON-interest bearing checking account and it just sits there, no.
The money could easily be invested to kick off 4% a year. If so, that income is taxable.
- lm050254Lv 57 years ago
They will have to pay taxes in the money earned by his/her investments