As you probably know, nobody won the jackpot in Saturday's Powerball drawing. However, 28 players in 15 states matched five of the six winning numbers. One of those was in Maryland.
Maryland Lottery officials say a Berlin father of four has stepped forward to claim his winnings. He's chosen to remain anonymous, but shared his story.
He told lottery officials he already bought one Powerball ticket in Delaware when he went to the grocery store to get a couple of limes. While his significant other waited in the car, he got those limes at a Berlin Food Lion and impulsively got a $6 Powerball ticket. That night, they watched the NFL playoff games until she went to bed.
The 51-year-old man, though, stayed up to watch the drawing.
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24 comments:
That's great. Good for him. He could have saved 50-60K in MD taxes if he had just put the ticket in a safe deposit block, gotten a FL address, drivers license and registered to vote there. Cash the ticket in and then switch back to MD resident after 10mos. or so. For the naysayers, yes it would take a couple days to do this and airfare, but when was the last time you made $50-60K in a couple days.
Nope doesn't work that way 9:42. They watch big lottery winners like a hawk. He would have to prove FL residency not just show he has established residency and he would have the burden of proof as it's not a court of law. For instance for tax purposes if you try and claim residency elsewhere and all your credit cards charges are from the state where you are actually living, you are screwed. I,ve heard of cases where they look at water usage and electric bills as well and outgoing cell phone calls. The bottom line is, to avoid getting yourself in trouble don't even attempt to do as you said, if you win any substantial amount of money via lottery.
Tax evasion. It's your residence when you bought it.
10:24 No it is not. It is your residence when you cash it and that is only if you claim the prize personally. Furthermore, the first thing anyone winning that much money should do is contact a tax attorney and accountant to decide how to best handle the winnings. LLCs and trusts can be created in any state and used for the purpose of cashing a winning lottery ticket. Obviously, not many people here understand much beyond a W-2, EITC and child tax credits.
you have to cash it in in the state you bought the ticket
You don't "cash" the ticket so to speak in the state in which you purchased it, you claim it there. 10:20 is absolutely correct. There is no way to avoid fed taxes, and you must pay taxes in the state of your residency. Residency is NOT established just because you vote in that state, have an address, etc. As 10:20 it's way more complex and they look at not so obvious indicators. There is no way to reduce the taxes short of taking the annuity payments. And that really doesn't do much as you are taxed in a higher tax bracket. It's nothing more than an urban legend to think that an LLC, trust, etc is going to help lower the tax rate. They won't. Trusts are generally created to avoid a winner overspending.
Any "tax attorney" and/or "accountant" is going to tell a winner the same thing. Pay the taxes, take what's let and be done. Dont' try and set up fraudulent LLC's etc, claim residency elsewhere, etc.
What most people don't know is that when you are a prize winner, taxes if they apply generally have to be paid before you can claim the prize. Of course w/something like this it is not possible, so you immediately become connected w/the state comptroller who has staff to walk you through the process which including waiving the pay before 'rule.' Tell them you are not a MD resident and see how far that gets you.
To add to my above post, after you claim, the money is transferred to you. So if you bought the ticket in FL while on vacation, you claim in FL-doesn't have to be done in person-and it is then transferred to an account in the state of your residency. This takes about 2 weeks.
If you win a jackpot, you are a fool if you don't move to a state without an income tax after claiming your prize and paying what ever taxes are due at that time. Why would you pay MD taxes on the income/interest from millions of dollars.
That's why they have the tax before rule. The prize is "claimed" in the state where ticket was purchased, money transferred to the state lottery agency in the state in which you reside and you can't get it until you pay the taxes on it. As stated above, this is waived and it's taken out of the winning. In big winnings there is no way to avoid saying you don't live in MD to avoid MD state taxes.
All the big MD lottery winners used to seek out the financial advice of Julius Westheimer (now deceased) who I have a connection to. He was at Ferris Baker Watts at the time and he gave the same advice as above: Don't try anything to avoid the taxes. It won't work.
"Obviously, not many people here understand much beyond a W-2, EITC and child tax credits."
LOL 11:14 you are certainly referring to yourself with that statement.
FYI-"LLC's and trusts" can NOT "be created in any state and used for the purposes of cashing a winning lottery ticket". A person wins the lottery and not an entity. There is absolute NO way to avoid taxes or reduce them by claiming residency elsewhere, creating a trust, etc. There are many safeguards in place to prevent this including yes, the taxes due before the money gets transferred to your account rule.
8:52 a winner can assign/donate a winning ticket to a trust before claiming. This does not reduce taxes but the benefit is anonymity in states where lottery winners are public info as well as to prevent overspending, people bugging you. It's called a claim trust and another benefit is unlike most trust, the beneficiaries aren't privy to any details such as trust assets. As far as an LLC, no.
You don't "cash" the ticket so to speak in the state in which you purchased it, you claim it there.
same thing dipwad
Being a MD resident and having purchased your winning ticket in NY would be the absolute worst case scenario. NY law states that the winnings on any tickets bought in a lottery run by the NY State Division of Lottery—and that includes Powerball—are NY state source income, taxable by NY, whether you are a resident or not. If you bought a ticket in that state, they will take their cut out before turning the money over to the MD state lottery agency.
Then they would take their cut before it's turned over to you.
To those saying you can reduce taxes by this way and that way forget it. There is NO way to try and get around it.
10:28 NO they are not the same.
Claim is proving or asserting you are the rightful owner-that's it that is all. Only that you have a legal right to something. Doesn't mean it's in you possession yet. Cash is when, in this case the money, is in your possession and you have control over it. You can argue with me all day long pal, but keep in mind I have forgotten more about this then you will ever ever know.
Not correct 10:28. A claim merely means you are making a demand for something that you have the right to possess. It is the first step toward cashing in on the winnings.
Well actually 10:28 claim and cash are not interchangeable. To claim means you are showing you have a right to possess. We've heard of stories of unclaimed lottery winning getting ready to expire and people come out of the woodwork with stories to the Lottery Agencies how they lost the ticket, threw it away, etc etc.
To cash or to cash in is when the money would be paid to you and is in hand and not before.
"Anonymous said...
You don't "cash" the ticket so to speak in the state in which you purchased it, you claim it there.
same thing dipwad
January 14, 2016 at 10:28 AM"
Funny how someone so lacking in knowledge of this subject calls others who are obviously well versed in laws and legal definitions a "dipwad". As stated above, to claim is merely the 1st step toward cashing in or getting the cash in hand. Claiming is part of the cashing in process. You can claim but still not be able to cash in if it's proven you don't have a right to possess what you are claiming.
10:28's comment is why self defense is not recommended for anything more complex than a speeding ticket and that's debatable by some. Laypersons do not understand legal definitions and what they think a word means, is not often or always so. Brings to mind Bill Clinton when he said "it depends upon what the meaning of the word "is" is." Non-lawyers thoughts were Slick Willie's at it again, trying to deflect and muddy the waters. Lawyers' thoughts were, Slick *Lawyer* Willie has a point.
I didn't think you could ask not to be identified in Maryland. I know Delaware lets you stay anonymous, but Maryland used to make lottery winner names public.
Like NY MD has withholdings for non residents. So does Arizona. So if you purchased a ticket in MD they tax you on it even if you reside in another state.
Mostly all true on here. A few years ago my friend won a Mercedes Benz valued at just over $100,000. Before the raffle's sponsors could even release the car to her, she had to pay the IRS over $25,000 and the state their portion. They don't just hand you over expensive prizes or lottery money and said "okay now be sure and claim this on your taxes." It's taken out after you claim it and the claim is verified. Then it becomes yours.
1:07 it's always been that way in MD.....except no one knew it until sometime in the mid 90's when the state attorney general's office was asked for clarification after someone requested anonymity. The AG's legal opinion found that an exception under the MD public info law included lottery winners.
So if I'm from MD and buy a winning Pball ticket while on vacation in FL, I must claim and cash the ticket in FL which has no state income tax but then I must pay MD income tax in MD? There are millions of people that travel weekly for vacations and work to different states. How is it handled if they win a lottery? Looking at the bigger picture versus never going west of the Chesapeake Bay.
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