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Just watch this Youtube video on the latest Powerball Winners! They get only $135 Mil after taxes on their $293.75 Mil Jackpot! So they keep only 45.96% of their winnings! Pathetic!
In the Philippines the lottery is NOT TAXED so you get 100% of it. But the record jackpot is around 750 Mil Pesos = about $17 Mil US Dollars so it's small. But this is considered a large fortune in the Philippines!
I blew $40 in tickets for this drawing and won $0... That hurts!
Don't like it, don't play the lottery. I have no problems with how much the winners pay in taxes. I'd say the same thing if I were ever lucky enough to win. After all, they're still coming out WAY ahead.
Well, their lump sum payout is only $192 Million, not 294M. So they actually keep a much higher percentage. (or at look at it this way: the portion lost to the lump sum is not a tax hit)
Poor them, they'll only keep $130 million or so instead of $192 million. Must be tough. I'm really crying over this tax situation.
Oh wait, no I'm instead shaking my head at the woman who is playing the lottery despite losing her job. Sigh...
Since the tax bill is paid off the top, all the rest of the money is tax free and never taxed again.
As far as it goes... If I was to win a million bucks, receiving $600,000 would still be a big pile of pennies from heaven for me.
In addition, lottery winnings are inheritable if the yearly payment option is chosen. $130 million would allow me to set up a trust for my kids, grandkids, and their kids that would immensely help all of them for the rest of their lives, long after I'm gone.
Buying more than one or two tickets is just a waste of money. The odds of winning are so long now that spending anything more does nothing at all to increase a person's chances of a win. Those incredibly long odds are the reason the lottery now reaches such heights; before they added the 6th number, big winners were much more frequent. The winnings were also lower.
The advertised jackpot is for the final payoff of an ANNUITY over several years. When you choose the cash option, you give up all the interest earned on the annuity. If the winner wants to make more money, they can buy their own annuities or stocks to get the same return or better. It's the power of compound interest over 30 years. If they choose the annuity, they would actually pay more taxes than the one-time cash payout. They would be paying taxes on the higher payout from the annuity, because the interest payments add up to almost double.
It's like getting a 30-yr mortgage on a house. You end up paying double for that house. In this case, the annuity ends up paying double to the winner.
Just watch this Youtube video on the latest Powerball Winners! They get only $135 Mil after taxes on their $293.75 Mil Jackpot! So they keep only 45.96% of their winnings! Pathetic!
In the Philippines the lottery is NOT TAXED so you get 100% of it. But the record jackpot is around 750 Mil Pesos = about $17 Mil US Dollars so it's small. But this is considered a large fortune in the Philippines!
I blew $40 in tickets for this drawing and won $0... That hurts!
American lotteries offer a long-term yearly payout on jackpots, usually something like 20 years. So winners can choose between a single lump-sum payment and the 20 year payout.
Lump-sum payouts are adjusted to reflect the "present value" of the prize, which is lower than the value if paid out over 20 years.
For example, if you invest $100 million for 20 years at x percent interest, you will end up with (wile guess here) $200 million total at the end of 20 years.
In this case a winner who chooses the 20-year payout does get $293.75 million. But they get a lot less if they take the lump sum now.
Also the winner would be in the US top marginal tax bracket, which is 35 percent, and they deduct that also.
Personally, I think lottery winnings should not be taxed. They are a bad deal to begin with, and government shouldn't be piling on taxes as well.
Also - I think this varies by state - I've seen that in at least one state, the yearly payments stop if you die in the middle of the payout (i.e. the money does not go to your estate), which would be a good reason for someone to take the lump sum.
Everyone complains that we need to tax the rich more...until they become the rich, then suddenly taxes are too high.
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