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It's pretty scammy the way these contests advertise a jackpot when the net present value of 20 annual payments of $50k is ~$625K with 5% interest. In a world in
by mhb 3y ago
It's pretty scammy the way these contests advertise a jackpot when the net present value of 20 annual payments of $50k is ~$625K with 5% interest. In a world in which they can make interest of 5%/year, they only need to pay the winner the interest on the prize amount.
- apricot 3y agoif I were to try paying my taxes that way, I'd end up in prison.
- kevinventullo 3y agoOn the other hand, spreading it out means paying less in taxes. Still, it almost certainly does not make up for losing the compound interest.
- stoneman24 3y agoIf I remember correctly (not a lawyer) gambling winnings ( inc lottery) are not taxable in the UK. Not that I ever won anything.
- chippiewill 3y agoYes. The government actually owns a bank, NS&I, that offers a special account "premium bonds" that effectively pays interest in the form of winnings from a lottery which make it tax free.
- petercooper 3y agoCorrect. Indeed, even things treated as gambling aren't taxed, such as financial spread betting. (Apparently this makes sense because if gambling wins were to be taxed then gambling losses should also be deductible, and since gambling is inherently a losing proposition, the tax authorities would lose more than they gained. I don't really buy this argument since they could just tax winnings and offer no deductions, but hey ho.)
- everforward 3y ago> I don't really buy this argument since they could just tax winnings and offer no deductions, but hey ho. I don't think this would make sense. If I walk into a casino with $200 and then proceed to lose $100 and win it back 10 times, then I lose it all and walk out, that tax law would say I had "won" and had to pay taxes on $1,000 even though any reasonable person would say I had actually lost $200. In practical terms, I think it would absolutely ruin gambling addicts. This makes it effectively impossible to actually net profit, and I'm doubtful they'll stop.
- erhaetherth 3y agobut in the US it is taxed? i don't know how, I assume it's based on what you walk out with. or maybe just the big winnings? i don't know.
- everforward 3y agoThey are taxed, but losses are deductible. It's taxed basically the same as everything else. At the end of the year you tally your earnings and losses, subtract the losses from the earnings and pay taxes on that amount or $0, whichever is higher (i.e. you can't deduct more losses than you had in winnings). I googled because I was curious and found an article about it [1]. It's similar to PayPal/Venmo/etc. Once your winnings meet certain criteria, the casino has to give you an IRS form (W-2G) and they presumably send another copy to the IRS. The withholding part isn't super clear, but I guess under some circumstances they also withhold 24% of those winnings to pay federal taxes. 1: https://www.hrblock.com/tax-center/income/other-income/gambling-winnings-tax/ https://www.hrblock.com/tax-center/income/other-income/gambl...
- jpablo 3y agoSpain had this: Tax winnings but not deduct looses. It creates situations like these: https://www.chess.com/news/view/francisco-vallejo-chess-tax-poker https://www.chess.com/news/view/francisco-vallejo-chess-tax-...
- mhb 3y agoProbably in many cases, but that depends on the winner's income, etc.
- petercooper 3y agoYeah, it's a long way from the "he won $1m" headline to the reality of "he won $38,000 a year".
- deleted 3y ago[deleted]
- 93po 3y agoGambling? Misleading? Surely not :)
- drc500free 3y agoYou shouldn't be allowed to advertise anything but the present value of the cash amount.