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Why aren't lottery winnings taxed at capital gains rate?

Should lottery winnings be taxed at capital gains rate?

  • Yes

  • No

  • I like pie.

Results are only viewable after voting.
I think you would have to sit on the winning ticket for at least a year to take advantage of the capital gains tax rate, by which time the ticket expires. Just another way the man stomps on the 99%, or at least those of the 99% that are bad at math.
 
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The question is, why is it taxed at all. It's a PRIZE for the WINNER, not the government. If the government wants money from the lotto then it's up to them to buy a ticket too.

This is something our government got right. 😉
 
Because poor people win the lottery, but rich people make capital gains. If we let poor people keep their winnings, they would just blow it on buying things, which doesn't stimulate the economy at all, unlike buying mortgage-backed securities.
 
The whole point of lottery is to make money for the state. To that end they need to keep at least half of every ticket paid into it, and tax the shit out of the winner. In the end the state keeps at least 3/4. Easy money.
Cuz lord knows we dont pay enough sales tax or property tax or fucking income tax.
 
It is not an investment that after you purchase it; it can be resold.
It has no long term value.

It is gaming income which is taxable by the federal government.
It is up to the state if they choose to tax it and at what level.
 
EagleKeeper said:
It is not an investment that after you purchase it; it can be resold.
It has no long term value.

It is gaming income which is taxable by the federal government.
It is up to the state if they choose to tax it and at what level.
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Exactly, treated like normal income IF they can prove you won it. If I don't get a W2-G, I ain't claiming it. Also you can subtract your losses to the point where your net tax is zero. They can only prove the ones reported, however you have plenty of ways to prove your gambling losses.

W2-G is only require if payout is better than 300-1 odds.
 
Broheim said:
I'm just glad lottery winnings are tax free here.
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Same. Whether it's lottery, or a game show, you are the one that won and should be the one that gets the prize. I always found the idea of being taxed on winnings to be the most retarded thing ever.

Apparently even item prizes in the states are taxed.

Congrats you just won the ultimate camping package, a fully loaded motor home, a yacht and a Jeep! What? You can't afford to pay the taxes? Better sell your house, car and declare bankruptcy! That's some prize.
 
Red Squirrel said:
Same. Whether it's lottery, or a game show, you are the one that won and should be the one that gets the prize. I always found the idea of being taxed on winnings to be the most retarded thing ever.

Apparently even item prizes in the states are taxed.

Congrats you just won the ultimate camping package, a fully loaded motor home, a yacht and a Jeep! What? You can't afford to pay the taxes? Better sell your house, car and declare bankruptcy! That's some prize.
Click to expand...

When it comes large prizes, there are usually options to liquidate it when you claim it.

Winning a house is by far the worst prize to win, unless it also includes a cash prize to cover all income taxes.
 
Wreckem said:
Not only that winnings above a certain amount automatically have 25%/28% automatically withheld.
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I have never had federal withold anything on my W2 winnings, only the state takes them out (depending on state of course). You're probably right, it is withheld on REALLY large winnings like bigger lottery payouts.

Hell, I hit a 2000 jackpot in vegas on a 1 dollar slot machine and didn't even have a W2 or get it reported. Just handed in my ticket and got my cash.
 
spidey07 said:
Exactly, treated like normal income IF they can prove you won it. If I don't get a W2-G, I ain't claiming it. Also you can subtract your losses to the point where your net tax is zero. They can only prove the ones reported, however you have plenty of ways to prove your gambling losses.

W2-G is only require if payout is better than 300-1 odds.
Click to expand...

That isn't how it works.

If one day you gamble and win 1000, and a month later you gamble and lose 1000, you can't just say you won't report anything. It doesn't work like that.
 
spidey07 said:
I have never had federal withold anything on my W2 winnings, only the state takes them out (depending on state of course). You're probably right, it is withheld on REALLY large winnings like bigger lottery payouts.

Hell, I hit a 2000 jackpot in vegas on a 1 dollar slot machine and didn't even have a W2 or get it reported. Just handed in my ticket and got my cash.
Click to expand...

In general most gambling wins that have gross proceeds of $5000 or higher, should have 25% withheld. That said, certain things like Bingo, Slots, Keno and Poker have different thresholds and/or withholding.

As of this year(could have been lower in prior years), a casino is supposed to withhold 28% if a slot or bingo win is over $1200. Over $1500 for Keno, and over $5000 for poker. I am sure quite a few people slip through the cracks when its under $5k. Not so much for those winning over $5k.
 
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DCal430 said:
That isn't how it works.

If one day you gamble and win 1000, and a month later you gamble and lose 1000, you can't just say you won't report anything. It doesn't work like that.
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Prove I won the 1000. I can prove I lost the 1000.

It does work that way. I have to keep close tabs on my gaming wins and losses. Onder 300-1 payout and it's not reported.
 
spidey07 said:
I have never had federal withold anything on my W2 winnings, only the state takes them out (depending on state of course). You're probably right, it is withheld on REALLY large winnings like bigger lottery payouts.

Hell, I hit a 2000 jackpot in vegas on a 1 dollar slot machine and didn't even have a W2 or get it reported. Just handed in my ticket and got my cash.
Click to expand...
My wife hit $3600 on the slots last week while on vacation in NY and had to give her SS# to the casino to collect the winnings and she was given forms to file for paying Fed taxes on the winnings.
 
TastesLikeChicken said:
My wife hit $3600 on the slots last week while on vacation in NY and had to give her SS# to the casino to collect the winnings and she was given forms to file for paying Fed taxes on the winnings.
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Yes, because the odds were greater than 300-1. It may be 600-1 for slots. For that it is reported to the IRS and you must present ID and SS number. A W2-G will be generated and sent to the IRS and mailed to you (by the folks you collected from) and you will be required to report the income. If you do not report this income on you taxes it's an automatic red flag.

Now, make sure she saves everything that proves she had a gambling loss of 3600 and her net tax on the winnings will be ZERO.
 
DCal430 said:
That isn't how it works.

If one day you gamble and win 1000, and a month later you gamble and lose 1000, you can't just say you won't report anything. It doesn't work like that.
Click to expand...

Hes also off on what requires a W-2G.

Report gambling winnings on Form W-2G if:

1. The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine,

2. The winnings (reduced by the wager) are $1,500 or more from a keno game,

3. The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament,

4. The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:

A. $600 or more, and

B. At least 300 times the amount of the wager, or

5. The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding).
 
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