Have Tax Questions? Ask a Tax Expert for Answers ASAP
Assuming - you are asking about tax liability?
The winnings is your taxable income - and to determine the tax liability it should be added to your other taxable income.
So to determine how much taxes you or your son will owe - we need to know your's and your son's other taxable income, filing status, and deductions.
Please provide more details - and I will help you to estimate the tax liability in each situation.
Is your son going to have a child in 2009?
will your son claim a child? will he be a head of household?
the question would be about in which tax bracket would be you and in which tax bracket would be your son.
We really need to know your and your son's taxable income besides lottery winning - to determine and compare tax liability.
If you are single and have other taxable income - assume - $25,000
you will have in 2009 - 5,700 (standard deduction) and $365(personal exemption) - so your taxable income would be $15,650 - and you will be in 15% tax bracket (up to $33,950).
Additional income from lottery winning will be taxed
$15,300 at 15% and all above - at 25%
Similarly we would determine the tax liability of your son.
However if he will use HOH filing status - up to $45,500 of taxable income will be in 15% tax bracket.
However - in case he is eligible to claim an earned income credit for the child - additional lottery winning will make him ineligible for EIC.
In additional if you have a lottery winning - you may deduct your gambling losses - however you should itemize to claim a deduction and losses are limited by the winning amount.
So we really need additional information to estimate and compare tax liability.
Let me know if you need any help.
If someone gives you the money without charge or consideration - that is considered a gift.
Gift is an income, but not taxable income. Please see IRS publication 525 page 33 for reference - http://www.irs.gov/pub/irs-pdf/p525.pdf
So - the recipient does not need to claim it on his/her tax return and does not owe any taxes. There is no limit on the gift value.
The donor - may need to file a gift tax return if the gift amount is above $13,000 per person per year (for 2009) , but there would not be any gift tax unless the lifetime limit of $1,000,000 is reached.