Florida Powerball winner claims $50 million jackpot

Attention all tax accountant, lotterypost members.  This is a unique situation for we members to analyze, since this Powerball Jackpot was drawn last year, at a much lower Federal Income Tax top tax bracket % rate.  Tax Accountant(s) Professional, would you please explain if the U.S.A. Federal IRS expects to see these Powerball jackpot winners to document the win as when claimed by claim-form (which would be year 2012), or when Florida Lottery Headquarters takes off their lower 25% Federal Income Taxes before printing the check/electronically transferring the after income taxes, etc. funds to winner's checking/financial account (which would be year 2013)? 

Thanks tax accountants, in advance, for your Federal IRS research and explanation.

Yeah I'd be living quite large on $200K per year with no mortgage.  Comfortable would take maybe $75K.

But I do understand what Piaceri is saying.  I remember seeing years ago that Brittney Spears was spending almost a million dollars a month.  I'm sure some people would need to feel like they don't even have to think about whether they have enough $$$ to buy something.  If they want it, they get it.

If the winner filed/turned in their jackpot claim in 2012 and then received their payout in 2013, the Federal tax rate will be based on 2012 figures. The most recent PB winners that split the $587 million jackpot adhered to that guideline because they knew the top Federal tax rates were going up. 

In years past, many winners have waited to claim their winnings until the new year thereby prolonging their tax obligations to the folowing year.

Thanks, tax account Jill34786, for sharing your expertise.

The only problem with WAITING to claim, IN MY STATE, is that if a MM or Powerball jackpot winner claims more than 2 months after the drawing date, they give up the right to claim the lump sum and are forced to accept payment as a yearly annuity amount.  Plus, for those November and December winners, some years, like this year the tax rate brackets aren't published early, by October, for the following year and Congress instead hurts them by publishing radically higher rates in January; as it, unfortunately, happened this year.

The Bush tax rates had been in effect for the past 10 years since 2003 so the only issue with someone hitting the jackpot near the end of year was whether they wanted to hold off their tax obligations until the following filing year. The rate was the same either way. If I were in a situation where I won in October and faced the 60-day grace for taking a lump, my choice would be to claim the lump sum even though the additional taxes would be due in roughly 4 months. 

The new rates that went into effect for 2013 will definitely hurt and going forward the pain may get even worse as Obama is conjuring ways to limit deductions strictly for the wealthy.

Living "quite large" on 200k per year with no mortgage may still be stretching it. If the winner bought a $3-4 million home the property tax at least in certain parts of Florida would run $70-80k per year. Throw in a few new cars every year and that budget is decimated. 

Don't get me wrong but 200k per year can go a long way as long as you don't go overboard. A modest home $800k-1m, a new vehicle every 2-3 years and you will still be able to splurge on several vacations and moderate luxury items. If someone lives out in the sticks and isn't keen on impressing others than 75k will be more than adequate to live a very comfortable lifestyle.

How much would it take to live large? If you can't "live large" on $20 million in this case as some are suggesting. What would be the number, ball park for most here?

I was answering a comment on a $200k per year budget and not $20 million. A $20 million nest egg clear of all tax obligations is more than adequate to live large for quite some time. This kind of money invested wisely should generate well over $1,000,000 per year without too much difficulty which in itself should be sufficient for most folks on this board.

Absolutely!  If he's willing to take on more risk -- and at his age he probably is -- then he can get a lot more. 

But even with 20 mil in the bank invested in moderate to high risk ventures that all work out, if he starts thinking he's rich and spending like Brittney Spears, he'll have it blown in 5 years.

This is what I mean about living comfortable vs living large. A single purchase of a BMW 6 Series convertible will eat more than half your $200k budget. Taxes and insurance on a $1m home about $30k-$40k, utilities (electric, gas, water, tv/internet service, phones) will set you back minimum $1.2k per month. And now your $200k budget is down to less than $40k. Add in health insurance, car insurance on that expensive car (plus others if you have more than one). Your finance guy takes a chunk. He/she does not work for free. Don't forget you have a cpa to do your taxes, too. That money goes fast. And don't forget you still have to eat.

Let's say you are 30 years old and you put your $20m ('ll go on a limb and say he nets less than $20m after taxes) into moderate to high risk growth and we hit another year like 2008-2009. Dude, your less than $20m is now much less than $20m, like maybe a third or more is gone in less than a week of fast falling markets. Some will lose more.

People seem to think they can live with expensive things on a little budget (not that $200k is a little amount). It does not work that way. Expensive things cost more in maintenance. It's like they say when you buy a horse, the least expensive thing is the horse. It's the upkeep that'll break you. Maintaining a living large lifestyle is expensive to maintain. Just because you won a net $20m in the lottery, does not mean you are Brittany Spears who pulls in $50m or more a year, year after year.

For me, a net $20m is a very nice early retirement (I'm not 30). There's enough for a cozy house on a nice sized lot for me and my critters (and a lawn gang to mow and blow), a new car every few years, a couple of expensive hobbies, maybe go back to school to study art, and trips to see my kids who live in different states attending college. There's money to send a gardener to help my Mom with her gardening, and a few fix it things around her house. Once they start making an appearance, there's money to take the future grandkids to Disney a few times. I wouldn't mind a nice RV to travel the highways to see this beautiful country of ours. I could live very well on $200k after tax (you did say no-tax munis). 

Good examples, Piaceri, of how a solo large net lottery jackpot winner could "pace" the spending of their net millions -- or interest/dividens from that net -- every 1, 3, 5, 7, & 10 years or so.

Additional, for a large, net, jackpot winner who lives in a large metro area, they might choose (even if own a car) to mainly turn to purchasing a bunch of "yearly" or "monthly" items:  train pass, bus pass, boat pass, taxis, limousines, seasonal tickets to opera, theators, sports, spectator, movie passes, murder-mystery sleeper train adventures, amusement parks, water parks, zoos, etc.

Wow, another quick pick wins again!!

But of course golfer. If your going to win big, the QP will always be your best odds and preferred choice of the savvy lottery player. 

In a recent seance with Einstein, all these facts were confirmed and approved by him wholeheartedly. 

Good win. Live day by day your way.

i'm gonna get me a BMW X5 

NOW i'm getting excited