Some people believe that they have a better chance of winning the lottery if they win in groups. Perhaps, there are some truths in it. However, you should be careful when playing the lottery in groups. The first rule you should always remember that don’t trust anyone. Do not play if everyone in the group doesn’t have a written agreement. Also, you should make sure that everyone in the group has FEIN (Federal Employer’s Identification Number). Write those numbers down before you play. Remember you don’t know these people and what they might do next. So, please be careful.
In most lottery games, only a single person or entity who can claim the prize. If you step up and claim the money, the lottery will report your SSN to the IRS, even if you play the game in the group. That means you should pay all the taxes from whatever you have. Furthermore, if you split the prize to other members, you should pay gift taxes. That’s quite messy, right? The question is, can you avoid this?
There are several easy steps that can help you avoid this messy situation. First, you have to make sure everyone in the group agrees on certain points. In order to do this, first you need a draft containing every single aspect you want them to agree. Then, before giving them the draft, you should have the draft reviewed by an attorney. As this only involves with checking the draft, not creating the new one, you should not worry about the cost. It should be much lower than drafting the new one. Here comes the next step, You have to obtain your FEIN by filling the IRS Application for Employer Identification Number or Form SS-4. You can reach the IRS to get this form.
Then, if your group wins the jackpot or any other prize, the first thing you should do is claim the prize using your new FEIN. This way, every member of your group is obligated to pay a certain amount of money as their fair share of tax. That means you should not be the only one paying for all the taxes, which can easily and quickly reduce your share to zero. You certainly don’t want this to happen. After everything you have won, you certainly don’t want to see other group members poured with money while you have to suffer paying all the taxes by yourself.