NJ or PA, where to buy lotto ticket

Buying a lotto ticket from either state is convenient for me; PA is slightly more convenient.

Assuming I purchase the winning Mega Millions ticket, should I buy the ticket in NJ or PA? I believe that PA charges no tax on lotto winnings and NJ does. Should I…

[ol]
[li]buy in PA, win, move, claim?[/li][li]buy in PA, win, stay, claim?[/li][li]buy in NJ, win, stay, claim?[/li][li]buy in NJ, win, move, claim?[/li][/ol]

Don’t sweat it too much; I’ll probably go with option #5 - buy in PA, lose, go to work.

It matters where you live/reside/file income taxes. It’s that state’s laws that determine whether you pay income tax on it.

I live in NJ. I thought I put that in there, but I must have removed it before posting.

It’s right there in your user name. :slight_smile:

I guess the question is, does NJ tax you on whether you lived there when you purchased the ticket (from any state) or on when the draw was. My total guess is that you “earn” the money when the numbers are drawn, so if you live in NJ on that date, you’re probably liable for taxes on the winnings. I am not a tax attorney, or any attorney at all, but that’s what makes sense to me from an accrual accounting perspective.

On the other hand, maybe it only counts when you collect the cash – that has to be the case, right? Because, otherwise people who choose the multiple payment option would have a huge tax bill up front that they couldn’t pay with the winnings.

My understanding is that although the various states pool their sales and prizes, that is technically among them, and doesn’t affect us, the players. In other words, we are supposed to view them as totally separate games which just happen to have the same grand prize. The upshot of this is that if you buy a ticket in one state, it will have that state’s name on it, and the prize cannot be claimed in another state.

I also think that all of the states exempt the lottery from state income tax, but only their own state income tax. Therefore, if you buy it and claim it in your own state, no state tax. But if you buy it and claim it in another state, then your state WILL want their cut.

Now, suppose you live in NJ, buy it in PA, and then you move to PA. I’m guessing that the critical factor will be whether or not you were a PA resident on the day you claimed the winnings.

de and pa don’t levy a state/commonwealth tax on winnings of people who win and live there.

federal income tax will be about 40%.

if you decide on lump sum just figure on getting half of that right off the bat.

today’s mega million is minimum 330 million annuity, 208 million for lump sum. if you go with lump sum you have 104 million with which to play. if there is more than 1 winning ticket, the amount is divided betwix the winners.

Since the top marginal rate is 35% that’s a little high (or are winnings taxed differently in a way I’m not aware of? You don’t pay payroll taxes on them, correct?) 100 million would be a shade under 35% overall.

http://www.ehow.com/how-does_4706236_lottery-winner-determine-taxes.html

new jersey is a state that does toss state tax (resident or no) in that could take it to about 50%.

pa and de do not, unless you are a non-resident. an added bonus is a de resident can claim and have their name withheld.

another odd thing is that pa gives you a paper check. it is in the winners handbook on the web site www.palottery.com . amazing… i just can’t imagine waiting for a registered letter with a paper check for 100+ million!

You’re a New Jersey resident, so you’ll pay New Jersey taxes no matter where you buy your ticket. The best you can do is get “credit” for taxes you pay to other jurisdictions. For example, I live in New Jersey and work in New York. I pay New Jersey taxes on my income, but I can get credit for the taxes I pay to New York.

Heck, if you buy something in another state where the sales tax is lower, you owe tax in the state where you live. For example, if you buy something in Delaware (which has no sales tax) that is taxable in New Jersey, you owe 6% use tax on that item.

Here’s an easy formula for figuring out whether you need to pay New Jersey taxes:

You need to pay taxes if you can answer “Yes” to any of the following questions:
[ul]
[li] Do you have money?[/li][/ul]

My plan worked!