Tax Strategies For Lottery Winners - Lump Sum vs Installments

Reply #22

weshar75 — Wed, 02 Feb 2011 23:30:20 GMT

When I win the lottery tonight that is powerball. I am going to take the 30 year annuity. I like the payment plan because I will grow old with the money coming to me every year.-weshar75

Reply #21

joshuacloak — Wed, 02 Feb 2011 06:40:18 GMT

Lump Sum vs. Installments

Lum Sum for the wisest investers, Installments are for idiots

they have a saying about investments

assumption is the mother of all f ups

by taking the installments, are you making the assumption, the Govt bonds they buy to pay for your Annuity are better then taking the 35% full tax rate hit now, and investing all the cash into other then govt bonds

i give you real numbers backed up by what a real clever invester would do right now me if i... [ More ]

Reply #20

PERDUE — Wed, 02 Feb 2011 04:28:25 GMT

Annuity for me.......

Gives me a good reason to go to the mailbox.

Helps keep me on a tight budget.

I'd view my annuity payment like a child support payment.......

It might come .......

It might not come........

Either way it goes my life will go on and at the end of the alloted time the payments stop.........

Reply #19

markp1950 — Wed, 02 Feb 2011 04:12:52 GMT

If I take installments...

I would be 85-90 when I get the last check.

If I move to a state tax free state, I still have to file taxes in following years.

I'm not sure that the US is stable enough now to be sure that I would still have money..

Take the money and RUN

Reply #18

Coin Toss — Tue, 01 Feb 2011 19:18:30 GMT

Good find, savagegoose. When the U.S. incomde tax came into being it was a temporary tax to help finance WWI.

Temporary tax, yeah right. No such critter, ever.

Reply #17

savagegoose — Tue, 01 Feb 2011 17:40:31 GMT

here is a history of the top tax rates in USA .

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Tax_rates_in_history

from 7% in 1913 to 94%. in 1944

if you want to gamble on the top rate going up or down take a look. or take the money now and avoid any future shock tax hikes.

Reply #16

dk1421 — Tue, 01 Feb 2011 03:48:55 GMT

I would definitely take the lump sum. Last year (or two), my state stole the lottery money that was intended for schools to use for the regular budget while calling the state lottery the education lottery .

Truly, I think if they would steal the money intended for the schools, I can see them stealing my annuity money.

I'm gonna go for the cash option

Reply #15

ca-dreamin* — Tue, 01 Feb 2011 01:44:19 GMT

I would take the lump sum.

Just because this article was written by an expert doesn't mean he knows what's best for me or that I should follow his advice.

When it comes to installments I just keep thinking of Social Security. What happens when the State or Gov etc decides they need to borrow from this (your) money. Never say never.......I think it could happen.

Reply #14

savagegoose — Mon, 31 Jan 2011 15:32:00 GMT

id suggest goinbg to a local community group at the leasst and signing up for a 4 week budgetting course.

like maybe expenses = income. that should cover staying afloat with annuities.

i think there is no sympathy for lotto winners when they blow it, but no one has experienced the pressure from freinds, family co workers aquaintences, and even bank managers to getat a chunk of their cash. evewn bill gates needs a budget. he sure as heck didnt get where he is spending more than comes in

Reply #13

Coin Toss — Mon, 31 Jan 2011 15:24:27 GMT

Someone here on LP (I'm sorry I forget who) has or had a signature, You can always buy a better anuity .

I think that's pretty good info, the state or the MUSL doesn' have making sure you get the best deal in mind.

There's good info in socalgal's OP but it sounds to me like that CPA can't get outside the box in their thinking.

For one thing, there have been too many instances where a jackpot winner takes an annuity and later on is approached by or they go to one of those companies that... [ More ]

Reply #12

dallascowboyfan — Mon, 31 Jan 2011 14:04:29 GMT

I say do what is best for you and your family...... everybodys situtation is diffrent

Reply #11

zerxfi — Mon, 31 Jan 2011 11:33:37 GMT

Anyone who wins should take the lump sum. Within the next 26 years, there will be tax hikes and high inflation, why get locked in with the annuity? Having control of your money allows you to make changes should new factors get added to the equation.

Reply #10

savagegoose — Sat, 15 Jan 2011 08:04:42 GMT

wow if the gov gets to change the tax rules after you win lotto and decide lump sum or annuity, then you should get to change how you want paid 3 months after they change their mind how things work.

Reply #9

socalgal — Sat, 15 Jan 2011 01:01:04 GMT

Even though he says to cash out up to 10mil, that wouldn't be the best option for everyone. If you're a retiree, it's better to cash out no matter what the jackpot is. Enjoy the money because you never know if you will still be around in 26 years. If you're young, then I can see how annuity can help you mature money-wise.

Also, Obama's extension on tax breaks is only until 2012. Tax brackets will change for the wealthy.

I wouldn't be surprised if California ends up following Illinois and... [ More ]

Reply #8

gy65 — Fri, 14 Jan 2011 19:56:20 GMT

Never can tell when the rules of the game will change (sometimes retroactively) . . example.

Reply #7

LottoNutt — Fri, 14 Jan 2011 19:33:47 GMT

Inflation will kill the value of the annuity payments

Reply #6

savagegoose — Fri, 14 Jan 2011 12:09:18 GMT

yeah barrista , i wouldnt take the annuity, im just saying the only reason to as i see it, is as i explained earlier. in a ideal world with resposible gov and no fraudster banks. and a set tax rate you can rely on. maybe id take an annuity.

but its take the money and run for me.,

Reply #5

ttech10 — Fri, 14 Jan 2011 05:45:01 GMT

In my experiences it's that the Cash Value option applies to your ticket unless you state otherwise you want the Annual Payments. I've gotten tickets many times where they don't ask and it's always Cash Value.

Reply #4

BaristaExpress — Fri, 14 Jan 2011 03:16:14 GMT

Yes higher tax rates in the future and don't forget the biggest factor of all when it comes to any currency in the world! The Value the world puts on that Currency! I'll take my dollar at todays value rather than the uncertain value 10 - 15 and 26 yrs. down the road plus adding in the higher tax rate on top of it!

As the old saying goes A bird in the hand is worth two in the bush will always hold true anywhere in the world, no matter where you go!

And think about this one while you're at i... [ More ]

Reply #3

savagegoose — Wed, 12 Jan 2011 14:29:58 GMT

i like the taking annuities then claiming poverty option to avoid giving family members too much.

seriously tho, with a large win like 100 mill, annuity payments would be ewnough for me to live off the interest, after 1st year, you would get teh 2nd annuity, and live off the interest of both amounts, having double the income to budget on.

by the time you get to yoear 5, you would start to become accustomed to being rich and by year 10 you would have it down pat.

a good way to

Reply #2

twoslow — Wed, 12 Jan 2011 14:03:20 GMT

Thanks for posting this. Good info.

In Texas we must select the cash value option at the time of ticket purchase if you want the cash.

TLC states You must select the Cash Value Option at the time of your purchase; otherwise, the 26 Annual Payments option will apply to your ticket.

To be safe I always mark my payment option at the time of purchase. You never know what the clerk will do for you.

Reply #1

sully16 — Wed, 12 Jan 2011 11:01:37 GMT

It's whatever best suits your needs, for some people taking the installment plan seems to make it easier to handle the vast wealth.

Tax Strategies For Lottery Winners - Lump Sum vs Installments

socalgal — Wed, 12 Jan 2011 08:24:59 GMT

The article below is written by a CPA and Tax Expert from California. He explains pros/cons from both sides of the payout.

Tax Strategies For Lottery Winners Lump Sum vs. Installments?

The most frequently asked questions from lottery winners and those who just dream about being a winner is:

Should I take a lump-sum or installments?

Take the installments!

Despite everyone telling you to take the lump-sum. Your heirs will receive the balance if you die before collecting all... [ More ]