Do I Really Have to File Taxes on Lottery Winnings?
If you are one of the fortunate lottery winners, then congratulations are certainly in order! It’s a part of your income that you may not have expected. But, nonetheless, it is part of your income, and in the United States of America, every taxpaying citizen is required to pay taxes on their annual income. So when it comes to lottery winnings, it’s not exactly free money after all!
Handling Your Winnings
A smart way to go about handling your lottery winnings is to deduct a percentage of your state taxes from the total and save it. This way, when tax season rolls around, you’ll have the money needed to pay taxes on winnings that may or may not be gone already!
One of the biggest mistakes that lottery winners make is forgetting to take taxes into consideration. Don’t worry, it happens to the best of them. It’s not exactly about winning the lottery per-say, rather than coming into a great deal of money that you’re not used to managing. There’s a lot of responsibility to it.
Handling money isn’t always about spending. Even though the media and society in general may portray it that way. After all, spending money is what helps our economy thrive! However, if the amount won is over hundreds of thousands of dollars, then even the most frivolous spender might find that kind of money challenging to get rid of and manage, not to mention the tax obligations behind it.
Lottery Winning Woes
The problem with managing lottery winnings is that the winners seldom track what they’ve spent. Between getting the dream car and home, and helping everyone with their hand out, the thought of acquiring a receipt might be far from the mind. However, it’s absolutely important to track your spendings because this is the thing that might help you lower your tax bill.
There Is a Way!
While you’re expected to pay taxes on your annual income, you’re actually required to pay taxes on your adjusted gross income (AGI). In order to get your AGI down, you need to deduct the total amount of taxable expenses. You won’t be able to write off everything you spend, but money spent toward charitable contributions like religious organizations, fundraisers, or any kind of non-profit can be deducted from your total annual income.
And here’s another piece of valuable information:
You can write off your lottery losses!
How about that?
See, it all balances out! However, there’s one stipulation: It has to be losses for that tax year alone. You can’t combine prior years.
Interested in Knowing More?
What else would you like to know about handling the taxes on your lottery winnings? Success Tax Relief has the answers. Don’t miss out on an opportunity to pay fewer taxes on your lottery winnings.
Contact the professionals at Success Tax Relief firm. We’re located in LaPorte, Texas, just 30 minutes outside Houston servicing taxpayers all over the country. If you would like a free consultation, contact us online or call 1-877-825-1179.