If you are lucky enough to win the lottery definitely plan on paying your taxes. Indeed, you’ll find that the government will be quite helpful in that regard, and that taxes will be withheld from your winnings.
Do remember, though, that even after your lottery winnings cease coming in that you’ll have to pay taxes. One Florida woman didn’t, and she’ll be spending two years at ClubFed because of that.
Rhoda Toth and her late husband won $13 million in the Florida lottery. She and her husband spent it all and then some, and had to declare bankruptcy. They also filed a false tax return. Eventually she and her husband were indicted on various federal tax charges. Her husband passed away before the trial began. Ms. Toth pleaded guilty, and asked to be spared from going to ClubFed because of bad health—she suffers from multiple sclerosis.
The IRS thought she wasn’t in as bad health as she said. And they videotaped her walking without help of crutches or a walker. So instead of no jail time the judge elected to send her away for two years.
This is a sad story, and brings up a point that we should all remember: whatever you earn, spend less and save some money for a rainy day.