Winning the lottery is something that most people dream
about. What they don’t consider when they’re dreaming about their winnings,
however, is having to pay taxes on all that “surprise income.”
Unfortunately, taxes are a real part of life…even for
lottery winners. With that said, however, some states are worse than others
when it comes to taxing lottery winnings. Hopefully, if you do win big, you’ll
discover that you don’t live in one of these high tax states.
Where You Don’t Want to Live
If you win the lottery, you might not count yourself so
lucky if you live in New York…or at least in certain parts of it.
You can expect to pay up to 8.82% of your winnings in taxes,
as well as the almost 4% local tax if you live in New York City or Yonkers.
Other bad states to reside in for lottery winners include
Oregon, with a 9.90% tax rate. Minnesota at 9.85%, and New Jersey at 8.97%.
If you do win in one of these states, there’s no sense
moving. Instead, you should work with a qualified financial advisor to minimize
taxes as much as possible.
You’ll Pay No Matter What
Even if you’re fortunate enough not to live in one of the
states with high lottery taxation rates, you’ll still need to report and pay taxes
on your winnings.
Lottery earnings count as just that- earnings or income.
Thus, don’t be dishonest about what you’ve won, especially since it’s generally
public record.
After all, as long as you have the right help, it’s not that
hard to minimize taxes owed as much as possible. Plus, your winnings are
unexpected income, so it’s smart to just be grateful for them…despite the
associated taxes.