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Just to take a break from all the "Demise of Social Security" threads -- I've got a real good feeling about the PowerBall Tickets I bought at lunch today. The Top Prize is $320 Million -- Cash Option would be about half that.
Just supposing you won a large sum of money, I'm talking multiple millions WOO-HOO !! What would be the proper claiming strategy ??
I think the Annuity Payout is stretched out over 30 years, is the Cash Option always the better choice ??
Do you set up a Trust or an LLC or something ??
How do you minimize the Taxes ?? Is the 5-year Income Averaging thing available ??
Lump sum is a no brainer because I'm old. And half of that 230M would be just fine with me. I could live on that for the rest of my life as well as any millionaire. I figure it would be about 60M after taxes.
There is an internet site..........Powerball Jackpot Analysis......that gives the exact state by state payouts before every drawing . ( after federal and state income taxes are with held )
For example.........my state of Arkansas I would receive $137,600,000 lump sum option ......AFTER state and federal, taxes were with held.
Your state might be a little more or a little less based on your state's income tax rate.
Hey, that is an interesting website. I see South Carolina takes a 7% bite out of my winnings !! I may have to give the ticket to my Dear Daughter to claim....she lives in Florida -- No State Tax on Lottery Winnings. This may be when setting up a Trust to claim the winnings in a Tax-Free State would pay off..
She might even benefit from the Annuity payout. At her age, she could collect for 30 years.
Last edited by FiveLoaves; 11-17-2016 at 05:17 PM..
Funny we would take second place and not even worry a bit. Taking the lump sum payout of the one million dollar second prize is more than enough for us. Yes I know it would end up being about 400 to 500k but that would just make it perfect for us. We don't ask for much.
The cash value is currently $202 million. By winning, you'd be in the top tier tax bracket for that year, which is currently 39.6% So you'd end up getting 60.4% of it, assuming you live in a state with no state income taxes, or about $122 million.
For that much money I would buy several nice homes around the world, nice cars, take some amazing vacations, and I'd probably spend about $22 million of it and keep the rest invested for the rest of my life to pass on to my children.
About $111 million here. setup a trust. Take 10% to live off for now and let the rest get interest.
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