If you like playing the lottery, one woman has an important PSA that could help when it comes time to pay your taxes.
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“This video is for people who enjoy gambling or playing the lottery, scratch-offs, MegaMillions, Powerball, whatever it may be,” TikToker @a88y812 says at the start of her video.
The woman then shares her story.
“I hit $500,000 on a $10 scratch-off two years ago and wasn’t aware that if you win the lottery, they tax you right then and there. So I was taxed … $150,000 right off the rip. And then, once tax time came around, I owed another $30,000,” she says.
The woman then shares the useful tip that lottery winners could use to offset such high taxes.
She says, “Unbeknownst to me, I had no idea that you could claim losses of the lottery tickets that you lose. So say you buy a scratch-off and you lose, you could claim that on your taxes as a loss.”
People are sick and tired of taxes
The TikToker’s video went viral with 214,100 views. Viewers shared their thoughts about paying taxes in the comments.
“I say we all collectively just stop paying taxes. It’s all a sham,” one person said.
“A friend of mine hit $1.6 mil here in Alabama. She walked out of the casino with $560k, come tax time they hit her for another $58k,” another claimed.
“The government always wins,” someone else wrote.
Many, including the creator, were also confused as to why the IRS garnishes taxes twice for the same winnings.
“That’s crazy your double taxed what’s the point of taxing at the beginning,” someone asked.
“Exactly they double dip it’s ridiculous,” the creator responded.
Why are lottery winnings taxed twice?
The reason it seems that lottery winnings are taxed twice is because when anyone wins over $5,000, the gambling agency typically withholds 25% of those winnings in taxes. Then, the IRS taxes the money a second time because they consider the remaining amount to be ordinary taxable income.
Come tax time in April, the individual would claim the winnings along with any other income from that financial year on their federal taxes. What they owe in taxes would depend on their tax bracket, which is based on their lottery winnings and other sources of income.
Can you claim gambling losses as a deduction?
Yes, the IRS states that taxpayers can deduct gambling losses on their taxes. The amount of the deduction just cannot exceed the amount of gambling income reported on the return.
Anyone claiming claiming gambling losses as a tax deduction must itemize them on Schedule A (Form 1040). Additionally, individuals must keep a detailed record of their winnings and losses, and be able to provide receipts, tickets, statements, or other records that show the amounts of both.
The Daily Dot reached out to the creator via TikTok direct message for further information.
@a88y812 #lottery#scratchoffticket #winner#Taxes#informativeinformation#blessed#gambling#peoplehelpingpeople#knowledge#taxwriteoffs#taxessuck ♬ original sound – a88y812
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