Cash option and taxes

Reply #42

eproducer — Sun, 10 May 2009 17:48:49 GMT

Using the last few years as a time line if you were to have followed the vast majority of advice from a good financial advisor you would have lost half or more of the value invested. That being your would have been advised to have a large mix in stocks because of the long term growth you would need to make up the difference in taking the smaller amount. What real estate would have gone up in this time frame? Bonds are safe but do not offer that long term growth. Perhaps your lucky with starting

Reply #41

Classic47 — Wed, 06 May 2009 22:03:20 GMT

Fine by me.

Reply #40

MaddMike51 — Wed, 06 May 2009 20:05:36 GMT

Find it yourself.I'm through arguing with you.

Reply #39

Classic47 — Wed, 06 May 2009 19:47:19 GMT

Then go on the Michigan lotto website, and show me where I am missing it, then maybe your adhominum insults may hold some value.

Reply #38

MaddMike51 — Wed, 06 May 2009 19:19:57 GMT

From one of your posts on another thread. What I am tired of is all this emphasis on education, like it's sooooooooooo important.

A little bit of education might do you some good!Learn to read

Reply #37

Classic47 — Wed, 06 May 2009 17:46:24 GMT

Why do you feel the need to defend the state so much? An average joe who wouldn't even think about an annuity option and would need some clarification indicating so.

And on the state site, if you look under the classic 47 part, you will see that it does say you have a choice between annuity and cash option, but it doesn't say exactly what the cash option would be. It just says that it's about half of the estimated annuity jackpot.

But that's beside the point. It's bad enough that the o... [ More ]

Reply #36

MaddMike51 — Mon, 27 Apr 2009 23:06:11 GMT

I stand by my statement that the overwhelming majority of lottery websites (PB MM) DO advertise both annuity AND cash value jackpot amounts.Your state only advertises the annuity jackpot amount but that still doesn't make it false advertisement because you CAN receive the full annuitized amount (minus taxes) if you so choose.It will just take you 29 or 30 years to get it.I have never been in a lottery retailer that does not advertise both methods of payments.Granted,the annuitized amount is more... [ More ]

Reply #35

Classic47 — Mon, 27 Apr 2009 22:11:39 GMT

Well, maybe in your state they show both, but it's not at the stores I go to. On the ML website, it advertises the jackpot, but doesn't say if it's an annual payment or a lump sum. You must go to a certain part of the site to find info on it, and it's still confusing because of taxes and all that jazz.

Reply #34

MaddMike51 — Mon, 27 Apr 2009 18:27:00 GMT

The stores in my area DO advertise both the annuity and the cash value.I'm sure that the same thing happens almost everywhere but people read the annuity amount and neglect to read the cash value amount and then jump to the conclusion that its false advertising.It seems to me that the lotterys bend over backwards to advertise both amounts.Just because some people are to dense to read the rules doesn't make the lotterys the evil people that some folks suggest they are.False advertisement?...what... [ More ]

Reply #33

DC81 — Mon, 27 Apr 2009 14:43:43 GMT

There are still a lot of people who do not have computers or internet access and thus can't look it up. Somehow there are still many people who actually think the advertised amount is something other than a annuity. After all this time, if one does that know that then it's their own ignorance. But it would be nice if they did clearly advertise the cash option amount more publicly. It really wouldn't be hard for the signs in stores to have Cash Value: ____ under the big numbers showing the annuit... [ More ]

Reply #32

MaddMike51 — Mon, 27 Apr 2009 13:07:03 GMT

What IS stupid is to post the few Lottery websites that DO NOT post the annuity AND the cash value amounts just so you can attempt to prove your point.The overwhelming amount of lottery websites that advertise PB MM jackpots DO POST BOTH OPTIONS.Go find someone else to argue your stupidity with.

Reply #31

KY Floyd — Mon, 27 Apr 2009 05:44:59 GMT

What's stupid is thinking that advertising isn't false or misleading just because truthful information is available elsewhere. Apparently it's impossible in your world to run an ad that's false or misleading as long as you have some mechanism by which people can find the real information if they're willing to go looking for it.

Reply #30

SpanaUnlimited — Thu, 23 Apr 2009 23:59:33 GMT

The problem with an annuity is it assumes the investment over the future. We don't know what the future will hold. The government might change that changes the ownership of an annuity therefore stopping future payments depending on the regime of a particular government.

Also INFLATION is a certainty with the future. Even though the definition of an annuity guarentees said amount in total payments over the life of the annuity. $100 million today is different than $100 million 30 yrs from now.... [ More ]

Reply #29

pigsNtrees — Thu, 23 Apr 2009 23:18:08 GMT

If memory serves, the current FDIC insurants at each bank is $250,000, a joint deposit account for a married couple is $500,000. That however is only good through 2010, at which time it will revert back to 100,000. So for a really big win, you will need to diversify your banking. This is where a smart financial planner with earn his money.

Reply #28

Classic47 — Thu, 23 Apr 2009 21:50:42 GMT

Well Classic lotto 47 is paid out in 30 years, so that's where I got the 20-30 from. I bet it would be closer to 20 thou a year after taxes and I guess even after they deduct winnings, they are still going to tax you. That is simply criminal...

And I guess the cash option would be wiser because it sounds like either way, you're not going to get all the money (be it taxes or whatever). Might as well get it all at once so you can at least get good interest (unless the feds are gonna take that... [ More ]

Reply #27

DC81 — Thu, 23 Apr 2009 21:19:50 GMT

I'm not even in my 30s and I still wouldn't take the annuity, it's really a bad deal and IF you end up in trouble with your money then well, you probably would have got yourself in trouble anyway, like many winners have and ended up selling the annuity for less than it was worth. It's amazing how many people think that they don't have to pay any more taxes on it after they get the money. Lottery annuities when you have a choice are, in my opinion, for suckers at best, lazy people at worst. At le... [ More ]

Reply #26

MaddMike51 — Thu, 23 Apr 2009 18:46:45 GMT

An annuity might be safer,but most people believe they can get a better return on their money if they were to invest it themselves.Age has a lot to do with not choosing an annuity,too.An annuity might be great for someone in their 20's,30's or younger 40's,but as you age it makes less since.At my age,late 50's,I seriously doubt if I have another 25-30 years of life left in me.I'll take the cash option when I win.

Reply #25

Classic47 — Thu, 23 Apr 2009 18:27:56 GMT

I'm not complaining about 72 million dollars, I would probably be set for life and so would the generations ahead of me. I could help many people who are in financial trouble and gain millions in interesting every year. The possibilities are endless, HOWEVER, as nice as it would be to win one million dollars, chances are, I would have to choose between taking it all up front (which would be about 350 thousand after taxes) or recieving 20-30 thousand a year. I probably would take the cash option... [ More ]

Reply #24

DC81 — Thu, 23 Apr 2009 17:45:09 GMT

I'll be more than happy to take $72,063,000 (after initial taxes including MI income tax) and turn it into an amount that would easily surpass the annuity over the course of the same amount of time with my own investments. You or anyone else can too if they win because it really wouldn't take a very high percentage return to surpass $155M over the course of 25 years. The annuity is terrible and the only one that wins with it is the State and Federal government.

Reply #23

Classic47 — Thu, 23 Apr 2009 16:14:43 GMT

I'm back.

I'm sorry, but it's tricky advertising at the best. I have happened to look up on the website and find out this stuff, but it's still unfair to those few who were actually fortunate enough to win. It's bad enough that winners have to pay all these additional taxes, but not getting paid even half that much when accepting the cash option is BS. They should at least make the estimated cash option more available to the public when purchasing tickets.

Reply #22

Stack47 — Thu, 23 Apr 2009 14:32:11 GMT

The cash value is actually the amount of money in the prize pool and the advertised jackpot is the amount of the annuity that can be purchased with that money. All jackpots are estimates of how much money will be in the prize pool at the time of the drawing and as four4me said, the estimates are usually on the low side so actual jackpot will be higher.

Currently they are estimating there will be at least $102 million in the next Mega Millions jackpot and with that amount, they can purchase a

Reply #21

MaddMike51 — Mon, 20 Apr 2009 22:39:12 GMT

You are probably right.However,I think that the announcement was designed to do double duty....such as make it clear that the jackpot is for an annuitized jackpot.

And the jackpot could be smaller than was estimated.I've seen this happen more than a few times.

Reply #20

four4me — Mon, 20 Apr 2009 22:26:48 GMT

Mike this is not directed to you.... it's for those that don't understand how it works.

One more thing,watch the televised drawings of PB MM.The hosts CLEARLY announces that the drawing is for AN ESTIMATED ANNUITIZED JACKPOT.

And thats because the proceeds haven't been tallied yet. Money they take in up to the last minute before the drawing is cut off aren't accounted for in the advertisement.

But the additional money will be added to the prize if the drawing is won or not. So a 200 mi... [ More ]

Reply #19

RJOh — Mon, 20 Apr 2009 21:53:50 GMT

What if a car dealership advertised a BMW for an outrageously low price and in the fine print said it does not include the engine.

I don't know about your area, but car dealers around here advertise such cars as $300 a month and in smaller print disclose that it's a loan with a large down payments and a balloon payment at the end of 3 years for qualified borrowers only and it's legal.

Reply #18

MaddMike51 — Mon, 20 Apr 2009 21:41:01 GMT

No,it WAS necessary!The lotterys have rules that are clearly stated and to argue that they are using false advertisement just because you don't agree with the rules is STUPID

Reply #17

GamerMom — Mon, 20 Apr 2009 21:31:36 GMT

well that was just rude and unnecessary

Reply #16

MaddMike51 — Mon, 20 Apr 2009 21:14:39 GMT

Its only deceptive to those folks who are too stupid to read and understand the rules.

Reply #15

JWBlue — Mon, 20 Apr 2009 20:54:38 GMT

Well, it wasn't clear to the person that started this thread.

Just because it says in the small print that it is an annuity doesn't mean it is not false advertising.

Instead of advertising the anuity amount, why don't they just advertise the cash value amount? Isn't that the clearest way to state the jackpot amount?

Why do you think they even decided to award the prize in an annuity. Why not just give the full amount up front? Because it sounds better to tell you the HUGE amount. It i... [ More ]

Reply #14

MaddMike51 — Mon, 20 Apr 2009 20:09:32 GMT

One more thing,watch the televised drawings of PB MM.The hosts CLEARLY announces that the drawing is for AN ESTIMATED ANNUITIZED JACKPOT.

Reply #13

MaddMike51 — Mon, 20 Apr 2009 19:44:00 GMT

No.I mean the Official Powerball website. http://www.powerball.com/ the Official Mega Million website http://www.megamillions.com/whereto/states_il.asp

They both clearly state what the annuity jackpot AND the cash option jackpots are.Having proved my point I will not argue with someone that gets his kicks arguing with everyone who has a different opinion than they do.

Reply #12

KY Floyd — Mon, 20 Apr 2009 19:28:45 GMT

Perhaps you mean this one that advertises the PB jackpot? http://www.oregonlottery.org/

Or this one? http://www.idaholottery.com/

Or this one? http://www.montanalottery.com/

Or this one? http://www.arizonalottery.com/

Or this one? http://www.nmlottery.com/

Or this one? http://www.sdlottery.org/

Or this MM site? http://www.nylottery.org/index.php

Or this one? http://www.galottery.com/

Or this one? http://www.illinoislottery.com/

Or this one? http://www.michigan.gov/lott... [ More ]

Reply #11

djklaugh — Mon, 20 Apr 2009 00:23:25 GMT

Winning a taxable amount in any game is like getting income in any other fashion. The feds take about 25% up front as withholding ... like they do from your paycheck. Then some states also tax lottery winnings while others either do not have an income tax (like Washington) or do not tax lottery winnings. USAMEGA provides a very good jackpot analysis for both MegaMillions and Powerball with how each state taxes such winnings and what the annuity option would look like for each jackpot. When/IF yo... [ More ]

Reply #10

MaddMike51 — Sun, 19 Apr 2009 17:22:32 GMT

Go to the Powerball website.It clearly states what the jackpot amount is.And it clearly states what the cash option amount is,also.The Mega Millions website does the same.

Reply #9

KY Floyd — Sun, 19 Apr 2009 15:18:22 GMT

Of course it's false advertising. Have you ever paid attention to the ads run by the lotteries? If they don't clearly state that the advertised jackpot is an annuity, and they usually don't, then the ads are false and misleading. If they advertise that the megamillions jackpot is now $100 million and they won't give you $100 million (less withholdings) once the ticket is validated, the advertised jackpot was clearly false.

Reply #8

SpanaUnlimited — Sat, 18 Apr 2009 03:19:22 GMT

The amounts listed in USA Mega only mentions the amount WITHHELD. Not your final tax burden.

For example in New Mexico....the state withholds 6%. However in filing state income returns....the highest tax bracket in our state is 5.3%. Which means a refund come filing time. I am sure NC operates the same way. They withhold a certain amount and the final tax burden can be lower or higher.

Reply #7

ca-dreamin* — Sat, 18 Apr 2009 02:39:36 GMT

If you take the cash option and invest wisely( with the help of a good financial advisor) you can end up with more money than if you take the yearly payments

Reply #6

Classic47 — Sat, 18 Apr 2009 02:03:10 GMT

So as I thought, by taking the cash option, you will only get a little over a third of the advertised jackpot. You still have to pay taxes even after only getting half your share. The anuity option looks good for bigger shares, but for smaller jackpots (at least compared to mega millions)

So from what I can tell, winning the jackpot would mean lots of jumping through legal hoops, dodging the IRS, and would probably lead to some financial stress. Don't get me wrong, it would be WELL worth it e... [ More ]

Reply #5

dk1421 — Sat, 18 Apr 2009 01:44:33 GMT

Man...then why doesn't USA Mega have the taxes for Federal at 35% instead of 25%? I know they have the NC taxes wrong (it's really higher than 7%).

Hmmm.... well, I guess their reason could be if you take the 30-year allotment instead of cash. Then the amount you receive could be under the bigger tax brackets. Is that the reason

Reply #4

SpanaUnlimited — Sat, 18 Apr 2009 00:46:35 GMT

The advertised amount is the amount you will get in total over the span of 25-30yrs...depending on the particular game. There is a link on the left-hand of the site to USAMEGA. Under the jackpot analysis....it gives you an idea of the bottom-line on what you will get.

The taxes will put you in the 35% tax bracket. That means excluding your deductions and exemptions....the IRS will get 35% of your money. The good or bad news is the MUSL withholds 25% of it before they even write you a check. O... [ More ]

Reply #3

MaddMike51 — Fri, 17 Apr 2009 23:42:09 GMT

It's NOT false advertisement!If you take the annuity option you will get the entire amount that they advertise,minus taxes every year,it will just take 29 or 30 years to get it all.If you take the cash option you will get whatever the cash option is minus state federal tax.

Reply #2

Classic47 — Fri, 17 Apr 2009 22:59:42 GMT

It is false advertising. I assume this means that if someone accepts a cash option for a 5.2 jackpot, they only recieve about one third of it (1.7 million).

Damn, that sucks. The government has their hands in everything these days. Greedy jerks.

Reply #1

JWBlue — Fri, 17 Apr 2009 19:03:48 GMT

The advetised jackpot amount is blatant false advertising. That is why.

The amount advertised is actually the total amount paid in an annuity over 30 years . The cash value up front is actually the cost of that annuity.

If you take the cash value, you pay 35 taxes. That is the marginal tax rate for income over $372,950.

I don't know why they would take taxes out of a $5,000 prize. If you are in a tax bracket under 30%, you will get some of that prize money back in the form of... [ More ]

Cash option and taxes

Classic47 — Fri, 17 Apr 2009 03:34:19 GMT

Hi, I'm new here and have been playing Michigan lotto games (mainly classic 47 as my name suggests) for over a month. I haven't won anything, but I am curious, how much taxes do you have to pay? On the Michigan lotto website, it says that for prizes over 5000, they deduct about 30% and that STILL doesn't satisfy your tax liabilities. Does that mean that even after they deduct, you still have to pay taxes on your winnings? Because if that's true, than you only get half of the prize advertized.... [ More ]