Powerball lottery jackpot cracks $200M markPrevious TopicNext Topic

No Jim!  If you recalculate Fed tax of 34% (true, they initially only withdraw 25%, but you are required to repay the remainder by the end of this calendar year -- whether they instruct you so or not or BIG additional tax penalty -- so don't accidentially lock-up/non-liquidity designate the remaining tricky 9% due) AND State tax of 6%your net will be $63.6 Million Dollars.  Be careful not to spend that $4.4 you mistakingly thought was yours to keep! 

This is why, when you win, the first person you rapidly visit is a net big lottery experienced  tax attorney (yep, covers law AND tax in one fell swoop, suddenly creating a family foundation, or a trust, or a few trusts, or some type of annuity, or a corporation might make sense in your new high net worth paradigm situation).

You said 34%. I keep hearing people say "No, it's not actually 25%, it's actually <insert percentage here>". In yet, every time they say that, they fail to say specifically what the additional taxes are on. As far as I know, federal tax is 25%. Could someone explain where this "additional" amount comes from? What exactly are you being taxed on?

Hopefully that will change, but when I voted for the lottery I had powerball in mind. Does not really affect me too much since I won't be playing anything else.

i can't believe powerball rolled!

I don't agree with your idea.

I want to win the whole 'pot - single person.   I forgive you for your ideology.

Wish me the luck when I buy  5 tickets, I have bought the grand prize winning ticket that will have the same numbers that will be pulled out during the draw.

  25% is only a  down payment. A lot of winners make a charitable donations that are tax-deductible, those can be taken off the remaining taxes due.  Without deductions tax bill would be a total of 34-36 percent of winnings right now, and Obama had plans to raise it to 40% - he has a dream to provide every voter and others with a guaranteed medical care.   I am not a tax expert so this is the information I found on the forums. Would be very happy if I am wrong.

As its name implies, you're being taxed on your income. Did you mean something else when you asked "What exactly are you being taxed on?"

The rate at which you are taxed depends on your taxable income. The law requires that a certain amount of money be withheld, but since they won't know what your personal financial situation will be they can't possibly be precise about how much tax you'll actually owe. For regular income from a job the withholding will be based on your expected annual income and the number of exemptions you claim, but the rules for witholding don't account for any other deductions you might have. For gambling winnings over $600 the withholding is 25%. If your entire income for the year is 10 grand you won from the lottery your final tax bill will be a lot less than the $2500 that was withheld. Even if you don't have any other income, winning millions in the lottery will mean that your gross income is well beyond the threshold for the maximum US tax bracket of 35%. For anyone who thinks it's something other than 35%, that percentage is easily available from thousands of sources accessible to anyone with a computer and an internet connection.

As for the finaltotal percentage you'll actually owe, it will depend on how much of the gross income is taxable. Even if you were to win a trillion dollars as a cash payout the final percentage would still be a hair under 35.000% because some of the income is taxed at lower rates. Whether your taxable income is 25k or 50 million, the first $16,700 is taxed at 10% (assuming married and filing jointly).  If you give 50% of your income to charities, or spend it on medical bills you may reduce your taxable income, but as a practical matter winning the current PB or MM jackpot means you can expect to pay very close to 35% of the cash amount to the IRS.

FWIW,  when people ask how much tax they'll pay I assume they're really interested in knowing how much money they'll actually end up with. Giving a million bucks to charity may reduce your taxes by 350k, but it reduces your net by the full million bucks. The tax deduction means that it only costs you 650k to give away a full million. That's great is you really want to make that gift. If your only motivation is getting tax deduction you're spending 650k to "save" 350k. YMMV, but I'd definitely rather pay the tax than get the deduction for medical expenses.

"Giant stimulus checks!"

.....gotta love it..........your post made me smile!

And now............the spotlight is truly back on Mega Millions................