What kind of premium do you think that people would pay for such a service?
It doesn’t work that way. The general rule of taxation is: If one lives in one jurisdiction (e.g. Ohio), but earns money in another jurisdiction (e.g. Iowa) goes as follows: The total tax paid is the higher of the two jurisdictions. Tax is paid to the jurisdiction where the money is earned first. If IA tax is higher than OH tax, then no tax is due in OH. Otherwise, the higher OH tax is collected, but credit is given to the IA tax already paid.
So if CA doesn’t tax lottery winnings but your home state does, you still have to pay your home state.
Even though Canada doesn’t tax lottery winnings, if you live in the USA and win an Ontario lottery, you have to pay the difference, which means that USA and your home state get to tax it all.
But say I bought the ticket in Iowa. Did I “earn” the money there? I would contend that the ticket I bought had no value until the winning numbers came back. And when those numbers came back I was not in Iowa.
Guess: Lottery winnings aren’t earned income. It’s gambling income which is treated differently. You get a 1099G for gambling money.
I don’t know for sure, but my hunch is that you would still owe Iowa tax. The winnings probably can only be claimed in Iowa. Hence, the ticket has no value in your home state.
So, these people who set up limited-liability corporations and blind trusts and all that… doesn’t that cost money too? Money that you’d have to have before you presented the winning ticket to be redeemed?
Would the lawyers and accountants essentially work for free, knowing that they’d eventually be paid from the winnings claimed by the corporation or trust? Would the buyer of the winning ticket just walk into their office and say, “Here’s the winning ticket for last nights Mega Umpty Trillions lottery. Can you do this work for me?”
The answer is given in the terms of the lottery. The rules of the lottery (publicly available before you buy the ticket and also printed on the back of the ticket) state in no uncertain terms that you owe taxes on lottery winnings in the state you purchased the ticket.
There’s also usually a requirement that winnings are collected in person. That could potentially be used (not that it’s necessary) to argue that you didn’t really “earn” anything until you collected within the state, making you subject to that state’s taxes.
I imagine it’s like most interactions with a lawyer. They’d do the work and send a bill.
It looks someone has come forward in Maryland, one of the few states that allows you to claim your winning anonymously:
The story notes that “no winners” will be at the press conference.
Three public school employees will split the MD jackpot. They will remain anonymous.
You definitely can opt out in the UK. why would you not ? Although I’m sure the begging letters will still find you somehow.
By SARAH BRUMFIELD
Associated Press
BALTIMORE
[…]
"The three [Maryland winners] claimed their prize Monday with a financial advisor and chose to remain anonymous, which is allowed under Maryland law.
The winning Maryland ticket is one of three nationally that split the biggest jackpot in Mega Millions history on March 30. The others were picked in Kansas and Illinois. Kansas’ winner claimed a share of the jackpot Friday, but also decided to remain anonymous."
Interesting–so far the holders of two of the three winning tickets remain anonymous–total of four people. The Illinois winner could do the same, using a trust or LLC.
So much for the skeptics…
What exactly the hell is this supposed to mean? Do you really think that you proved anyone wrong with that post?
As everyone said, you can do it in some states and not in others. As it happens, the two winners so far came from states where it is allowed to be anonymous. If there was a California winner, they would not be anonymous. What is your difficulty understanding this?
Lookie here, from Post #7:
Oooh. I can bold stuff too. Only in my case the bolded portion is relevant.
I seem to recall a few years ago in Australia’s biggest jackpot at the time (a meagre 30 mill), the recipients were keen to remain shadowy figures in the background. But the media tracked them down and exposed them anyway.
Overreact much?
Rarely and certainly not then, unless amusement is an overreaction.
In Peru, the usual way is to have a representative of a bank receive the big check. Noone would appear on TV taking a 3 million-dollar check.
Since it’s alwyas a lump sum, taxes are collected prior to your receiving the check, so it say the actual ammount you receive.
Incorporating is actually really easy. Once you have that, the corporation could claim the win. The IRS will however reject the purchase of lottery tickets as an expense so just be happy you won.
In the grand scheme of things there has to be a way to have your lawyer claim the prize on behalf of your trust or newly formed corporation.
It’s not where you live most of the time that determines whether you get taxed there. It’s not where you happen to be at the exact time that determines either. It’s where you earn/make the money that determines this.
It’s not the drawing that makes you the money, it’s the purchase of the ticket, which had to be done at the point of sale. Therefore, your winning lottery ticket was purchased in that state, and that’s where the money was earned. You pay state taxes on that money to the state that issued the ticket.