Lottery and Taxes

[MP5_Rizzo]

I just read something about the taxes due on the current Powerball lottery.  It really depends on how you take the payout and what state you reside in before the tax liability and the net winnings are determined.  What got me to wondering though is the Federal Gubmint is going to withhold 25% or more for sure.  So out of $1.5 Billion they IRS will collect at roughly $375 Million on this one lottery.  I guess through enough google searches I could get a rough guesstimate but are there any bean counters out there that could put it into perspective a little better.  What percentage of tax revenue does the Federal Gubmint collect annually from all lottery payouts?  I'm sure in the big picture it's a drop in the bucket but would be an interesting number to know.

Edited January 12, 2016 by MP5_Rizzo

[gjohnsoniv]

I think most if not all of us would be quite happy with the remainder after taxes. I'm curious about the tax percent as well.

[Hozzie]

I think it is closer to 40%. But most smart people will take the lump sum, which is usually just a bit above half. I am guessing a rough estimate of after tax winnings at $500 million.

[CommsNBombs]

Hell I dont care if it was only 100,000 after taxes...Id be a happy MFer.

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[Lumber_Jack]

I think it is closer to 40%. But most smart people will take the lump sum, which is usually just a bit above half. I am guessing a rough estimate of after tax winnings at $500 million.

Depends on your age. An annuity would be like 46mil a year for 30 years. Some financial planners suggest taking the payments to prevent blowing it (not such a risk with this high jackpot). Basically you win the lottery every year for 29 more years. It's transferable to your estate as well if you die before its paid.

[MP5_Rizzo]

I think it is closer to 40%. But most smart people will take the lump sum, which is usually just a bit above half. I am guessing a rough estimate of after tax winnings at $500 million.

 

 

Hell I dont care if it was only 100,000 after taxes...Id be a happy MFer.

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I'm not concerned with what the winner will receive after taxes. I like many of you will no have problem figuring out what to do with any lottery winnings whether it be a few hundred or millions.  My question is how much is the IRS collecting annually from taxes on lottery winnings?

Edited January 12, 2016 by MP5_Rizzo

[CommsNBombs]

I'm not concerned with what the winner will receive after taxes. I like many of you will no problem figuring out what to do with any lottery winnings whether it be a few hundred or millions. My question is how much is the IRS collecting annually from taxes on lottery winnings?

I believe it is something like 40% luxury tax, and then whatever the fed tax/social secuirty % is off the top.

Hence itll be better to take the lump rather than the annuity and keep getting smacked for taxes.

Also, not buying a $100M mansion helps...

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[Trekbike]

Depends on your age. An annuity would be like 46mil a year for 30 years. Some financial planners suggest taking the payments to prevent blowing it (not such a risk with this high jackpot). Basically you win the lottery every year for 29 more years. 

 

Yep.   That's the safest route to go.  

 

Same reason people set up trust funds for kids.    Otherwise dad's money is gone in the blink of an eye.   

[JPR1959]

Right now the cash option is $930,000,000.  I could retire on that.

[bersaguy]

Right now the cash option is $930,000,000.  I could retire on that.

I could retire on 50% of that just fine.................... :bowrofl:

[btq96r]

No guarantee that money will be there for the next 30 years if you do annual payments.  I'd take the lump sum and set up a plethora of investment trusts at various low to medium risk levels with at least half the money in 10-20yr US Treasury Bonds.  I'd just use a few of those accounts to write checks to myself from and enjoy life.

 

First, I'd buy enough land somewhere far enough away from the beaten path to avoid eminent domain for the next 50 years and build a modern day castle that would be off the grid.  But it would be within a hour or two drive to a regional airport, connecting flight to a major airport (Chicago, Boston, New York), so I could travel anywhere I wanted easy enough.

[nightrunner]

Maybe I'm just an old country boy that doesn't know any better, but I don't think I could spend $930,000,000, as mentioned earlier as the cash payout. A couple mil, easy. A few mil, likely. But, 930 mil, no way I could ever conceive a way to spend that much. Heck, you could buy more gold than what is supposed to be in Fort Knox.


On second thought, I might just buy Colt, seeing how they need a buyer right about now...

[Sam1]

39.6%

[No_0ne]

No guarantee that money will be there for the next 30 years if you do annual payments.  I'd take the lump sum and set up a plethora of investment trusts at various low to medium risk levels with at least half the money in 10-20yr US Treasury Bonds.  I'd just use a few of those accounts to write checks to myself from and enjoy life.

 

First, I'd buy enough land somewhere far enough away from the beaten path to avoid eminent domain for the next 50 years and build a modern day castle that would be off the grid.  But it would be within a hour or two drive to a regional airport, connecting flight to a major airport (Chicago, Boston, New York), so I could travel anywhere I wanted easy enough.

 

You just won nearly a billion bucks, don't be cheap, buy your own jet and hire a pilot ...

 

 

Maybe I'm just an old country boy that doesn't know any better, but I don't think I could spend $930,000,000, as mentioned earlier as the cash payout. A couple mil, easy. A few mil, likely. But, 930 mil, no way I could ever conceive a way to spend that much. Heck, you could buy more gold than what is supposed to be in Fort Knox.


On second thought, I might just buy Colt, seeing how they need a buyer right about now...

 

Buying Colt might make it easier to blow that billion dollars than you think ...

[Sam1]

If I won, the first thing I would do is disappear.  The second thing would be to give half of it away to medical charities for kids or something else of my choosing.  Third would be to blow 5% on completely useless stuff just to get it out of my system and fourth would be to finish school and spend the rest of my days telling all family and "friends" to screw off.

[CommsNBombs]

If I did win Id pay off my truck and wifes car...which is chump change compared to a few hundred million

Then I need some more baby diapers and formula...and wipes

Then hire a financial advisor and find out what accounts to invest 50% on

Buy a few 1050s and Mark 7s for 9mm, 357SIG, 10mm, 45ACP, 556 and 50AE...along with a FFL 06 so I can order in stupid bulk from Black Hills

Buy some land and build a bunch of Type 1 Magazines and get my FEL in addition to FFL 11/20 and buy a Mark 19, and a GMV and proceed to blow up junk cars with HV 40mm grenades

A Rolls Royce Ghost...just to get the stupid out of my system

Finish my degree, get some certs, Id like to be a pediatric orthopedic surgeon one day.

Invest some cash into pediatric hospitals and start a non profit free clinic

Oh and since Im getting FAs a minigun will need to be on my GMV

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[peejman]

Spend it? Easy, get into racing. Something cheap like yachts or war birds.

Want to make a small fortune in racing? Start with a large fortune. Edited January 13, 2016 by peejman

[Peace]

The payout will be taxed at ~40%.  If you invest, diversify, etc.  The return that you make a living off of (the portion in the market) will be taxed at 15%.

 

You don't live off of the winnings, you let it make a living for you... even with this much.   If you use the money while you let it make you a living, you could fairly easily setup a dynasty for generations to come.

[runco]

I could live on my general savings interest alone if that was in my savings account.  My grandchildren's grandchildren would still be set for life. 

[Sam1]

for the numbers people just out of curiosity...

 

If someone did win and donated 50% of their winnings to IRS recognized charities, what would be the end result?  Say they won $100mil, donated $40mil.  The tax rate was 40%. IRS gets close to nothing and the charities win.

 

It's probably not that simple, I have liberal math stuck on the brain tonight and can't figure it out.

[nightrunner]

Buying Colt might make it easier to blow that billion dollars than you think ...

Colt can be fixed, and made great again, with the right leadership.

[No_0ne]

Colt can be fixed, and made great again, with the right leadership.

 

Exactly what the last several sets of investors said too ...

[No_0ne]

for the numbers people just out of curiosity...

 

If someone did win and donated 50% of their winnings to IRS recognized charities, what would be the end result?  Say they won $100mil, donated $40mil.  The tax rate was 40%. IRS gets close to nothing and the charities win.

 

It's probably not that simple, I have liberal math stuck on the brain tonight and can't figure it out.

 

I'm not too well versed in tax laws for the stupidly rich, for obvious reasons ...

however, a deduction of your $40 million would still net you a tax bill on the remaining $60 million, you're confusing tax credits with tax deductions.

[TripleDigitRide]

If I were fortunate enough to win that kind of jackpot, my main focus would be on setting up several no-kill animal shelters all over the country. Then I'd gladly pay off politicians to pass much stricter laws pertaining to animal abuse. 

[Mike.357]

geez all I want is a bass boat.