As the Mega Millions jackpot grows to a record $540 million, those buying tickets are not the only ones with dreams about what a win could mean. State governments facing hard times understand a local winner would bring a bonus tax to the home state.
The taxes on the lump-sum payment option to any single winner would bring several million dollars of revenue to the state. That revenue in could restore the entire cuts being faced by social services programs, pay for several hundred low-income housing units and help to increase the number of state police.
The sale of ticket has grown to the point that the current jackpot is the highest in the history of the lottery in the US. A lump sum payment for a winner would bring that person almost $400 million if they are the only winner.
States like Rhode Island, with a 5.99 % tax rate would gain over $23 million with the win. Currently the state has a $7.9 million budget and is $22 million short.
Each state sets its own tax rate for the winnings on the lottery. In New York, citizens pay 8.82 percent, but in California and several other states there are no state taxes.
Ohio would also collect $23 million in taxes, a fraction of the $56 billion 2 year budget, while Montana would collect $50 million for an in-state win. The winnings could help with state buildings as well as infrastructure.
In February and March of this year, Rhode Island saw two Powerball wins, one of $336.4 million and the second of $ 60 million. These two wins have brought $17 million that may replace a $20 million bond.
While states cannot depend on lottery winnings, any state where the tickets are sold would be happy to collect the windfall.
April 15th, this is the date that all Americans associate with the IRS. For many it is a stressful situation to try and figure out what exactly needs to go on their return. This is where a Certified Public Accountant or other tax professionals can help by pointing out useful tax adjustments now for next year’s return.
The regulations and codes for taxes are constantly changing and that is truer for this year because the Bush tax cuts are set to expire December 31. These cuts are projected to change how deductions can be made for retirement plans like the traditional IRA and Roth IRAs. Contributing more to a 401k through work can also be a good way to lower the taxable income one acquires within a fiscal year.
For the more affluent individuals it might make sense to roll over any traditional IRAs they own into Roth IRAs if they are projecting that their income after the age of 59 and half will be higher than it currently is. This would allow them to draw the payments from the Roth IRA as non-taxable income when they retire because they have already paid the taxes on the interest returns from those accounts.
Again, it is imperative to talk to tax professionals in order to gain the advice needed to plan for the changes coming in the next year. Seeking the advice of the benefits office within one’s company can help and is where the necessary adjustments need to be requested for changes in the 401k and the withholding forms. Also, the customer service representatives of the financial institutions that the retirement portfolios are being managed can also offer some guidance to tax adjustments now.
Maryland state senate has voted in a new tax and people are unhappy about it. Not too long ago the state senate in a majority vote decided to introduce a so called millionaire’s tax that would make people who earn more than half a million dollars pay more in taxes. The collective thought of the senate is split at the moment, many think this is the right thing to pursue and others think that this is no fair to the people and that everyone should be taxed equally. This tax vote came as the State Senate approved its version of the budget. This new measure moves next to the House of Delegates, which has flagged an openness to approaching the rich and asking them to pay more – but not really using the same outline favored by the Senate committee. This proposed idea reflects a nationwide debate that has pitted the president against the congressional right leaning republicans in a tense standoff over the best way to lower the federal deficit. This also sparked an identically heated discussion in the Maryland State Senate. This idea also revives a higher tax bracket in Maryland that has in the past led to years of concern as to whether or not it would drive high earners out of the state before it expired two years ago. The Maryland State Senate’s budget includes around half a billion dollars in spending cuts, moves the approximate quarter billion dollars in teachers’ pension costs to the counties for around five years, and then gives the state authority to seize the local income tax collections if counties don’t appropriately fund their education system. The entire ‘Tax the rich’ vote sounds like a modern day Robin Hood act.
Governor Chris Christie took his message to voters of New Jersey during a town hall meeting on January 18, 2012. He hit the airwaves in many media appearances. The first-term Republican governor of the Garden State attempted to sell his 10 percent income tax cuts for all. One day after his state of the state address, he informed crowds that he is the architect of New Jersey’s economic comeback.
With a boldness that only success can give, Christie presented the plan as a model for national economic policy too. Of course, this continues to feed into the speculation that he is positioning himself in a positive light for the 2016 presidential election. Political spectators also believe the tax cut is a way to firm up his qualifications as a fiscal conservative. He has not only cut spending, but also he has cut taxes. New Jersey has a notorious reputation for high taxes and high spending.
Governor Christie takes credit for the current economic environment of New Jersey. In the first two years of his term, he has added private- sector jobs, reduced more than 375 government programs, placed a cap on increased property taxes, and overhauled that state’s pension and employee benefits programs. He plans to outline detail of the entire state budget in February. Christie stated that the intention is to pass that tax relief in phases over the next three years. His plans are a sharp contrast to other governors in liberal states such as New York, California and Illinois. Those Democrat governors raised taxes and targeted successful taxpayers with tax hikes. Christie’s tax cut idea caused thunderous applause at his town hall meeting in the New Jersey suburbs.