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money after cash value and taxes

Topic closed. 14 replies. Last post 11 years ago by dvdiva.

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United States
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April 24, 2005
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Posted: May 5, 2005, 3:31 pm - IP Logged

how do you find out exactly how much your taking home if you choose cash value option.  Is it the jackpot divided by two then minus a 40% tax?

So for the current powerball it would be 83/2 * .60 = 24.9 million, ack thats a much smaller number

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    Columbia City, Indiana
    United States
    Member #2978
    December 9, 2003
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    Posted: May 5, 2005, 4:52 pm - IP Logged

    It depends on the game. The cash option for the PowerBall game pays 55% of the advertised jackpot. State taxes will vary, of course, but you can count on paying around 30% in federal taxes.

    It's a little disheartening to watch your $83M windfall dwindle to a check worth less than half of what they'll say you won, but when the advertised jackpot reaches $80M or more, you can't get hurt if you use your head.

    The next PowerBall drawing is for $83M, so 55% of that comes to $45.65M. Figure 32% of the remainder goes to state and federal coffers, and you still have $31,042,000.00 in cash. Invested at five percent, that will yield a gross annual income of $1,552,100.00. Now, however, you've satisfied the federal requirements for long-term capital gains, so your federal tax is capped at 15%. Even if your state tax is 8%, you'll still net nearly $1.2M a year from your investments.

    Now that's a paycheck.

    Come, Pinky; we must prepare for tomorrow night...

    Jim

      weshar75's avatar - Lottery-042.jpg
      Mcminnville, Oregon
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      Member #3013
      December 13, 2003
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      Posted: May 5, 2005, 5:27 pm - IP Logged

      They sure do take alot before you get your share of the jackpot!

        SirMetro's avatar - center
        East of Atlanta
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        August 11, 2004
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        Posted: May 5, 2005, 5:36 pm - IP Logged

        I think the USA Mega site will actually break down what you get based on what state you live in. If not it, check the official Megamillions Web site.

        Sir Metro

          hypersoniq's avatar - 8ball
          Pennsylvania
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          April 6, 2003
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          Posted: May 7, 2005, 10:00 am - IP Logged

          Cash value of tonight's powerball is listed as 47.1 million. There is no "rule of thumb" formula to glean the cash from the annuity value as this gap can fluctuate with annuity interest rates. PB posts the cash value tho.

          Tonight's breakdown...

          Cash Value = $47,100,000.00

          Federal Tax Bill (@35 %) = $16,485,000.00

          You keep = $30,615,000.00

          State and local taxes vary (none for PA residents ;-)  )

          here's the tricky part...

          MUSL tax withholding is only 27% = $12,717,000.00

          that means you owe uncle sam $3,768,000 right away. you must pay it in that tax year and can use an estimated tax bill payment. for the life of me I can't imagine why the MUSL can't just hold the top federal tax rate, as anything over 311,000 is taxed @ 35%... up to 311,000 depends on your situation (married/single) and this is why it is absolutely mandatory that you contact a "dream team" if you win... Attorney, Tax Attorney, Financial Planner...

          Playing more than one ticket per game is betting against yourself.


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            Posted: June 1, 2005, 12:41 pm - IP Logged

            Federal withholding is currently 25%.

              dvdiva's avatar - 8ball

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              September 17, 2003
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              Posted: June 1, 2005, 1:14 pm - IP Logged

              You can count on 35% being gone plus whatever the state income tax is. You should see a very good tax attorney but I doubt you will get any deductions. Trusts will just protect you from lawsuits more than being a tax haven.

              That's also why I shake my head in disgust at people whining that you are greedy if you wan a record jackpot. They have no clue how small that check will really be. This isn't euromillions where you get the check in cash and tax free. You can count on getting only 1/3 (in a tax free state like WA state) to  28% in a heavily taxed state like CA, OR or other states at a 9+% state income tax rate.


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                Posted: June 1, 2005, 1:24 pm - IP Logged

                diva:

                I believe CA doesn't tax lottery winnings.

                  dvdiva's avatar - 8ball

                  United States
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                  September 17, 2003
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                  Posted: June 1, 2005, 3:47 pm - IP Logged

                  Considering how much they want to raise taxes on everything in CA how long will that last?


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                    Posted: June 26, 2005, 12:35 pm - IP Logged

                    Connecticut has yet to have a PB cash-option winner. This one better not blow it!


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                      Posted: June 29, 2005, 5:20 pm - IP Logged

                      So the federal tax withholding is 25% in California. If I should take cash value of $63 million for Friday's Mega Millions, what's the net amount I would have left after federal tax withholding [paid back to Uncle Sam]? What percent is federal tax withholding right now?

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                        FLORIDA
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                        Posted: June 29, 2005, 5:56 pm - IP Logged

                        So the federal tax withholding is 25% in California. If I should take cash value of $63 million for Friday's Mega Millions, what's the net amount I would have left after federal tax withholding [paid back to Uncle Sam]? What percent is federal tax withholding right now?

                        .
                        The current federal tax rates are 10% 15% 25% 28% 33% and 35%. The state of California have the following tax rates 1% 2% 4% 6% 8% 9.3% and 10.3%.
                         As I understand it just because California withholds 25% for your federal taxes this doesn't get you off the hook for possibly up to another 10%  of federal tax that your accountant will have to file as an estimated tax which will probably be done before the end of the current calendar year in say three payments.
                        This is similar to what people who own their own businesses have to do with their own income which I'm sure Todd can touch on better than I can.
                          Your also still liable for California taxes even if you move out of  state. One last thing I'm not an accountant and please take the previous information as here say or speculation only thank you..........
                          TheGameGrl's avatar - character catafly.jpg
                          A long and winding road
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                          Posted: June 29, 2005, 5:57 pm - IP Logged

                          So the federal tax withholding is 25% in California. If I should take cash value of $63 million for Friday's Mega Millions, what's the net amount I would have left after federal tax withholding [paid back to Uncle Sam]? What percent is federal tax withholding right now?

                          The minimum they will withhold on the tax is 25% prior to issueing the first installment or cash payout. Another poster on here was correct that 35% is the rate at which the jackpot will be federally taxed/due that year.

                          The problem most people have is factoring in the state and local taxes since they vary by regions/counties. My state has tax exempt on state lottery winnings but my county is @ 1.7% so thats basically a total of 37% I'll owe the government if ever I win larger then 320,000 in any one drawing.

                          So using the theory of 63mill less 40% cash option=37.8 mill

                          , less the (actual) 35% federal + 2% local=

                                    23.4 million cash to ticket holder.

                          Sounds good to me! :)

                          ~~Is it true, Is it kind,Is it necessary. ~~~

                           Thanks be to the giving numbers: 1621,912,119 02014

                            visiondude's avatar - eye3logo
                            light on my feet
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                            Posted: June 29, 2005, 11:57 pm - IP Logged

                              dumb question #1 ;

                              will a person fare better tax wise in a state with no state tax on lottery winnings like california? 

                             or how about a state like georgia that grabs 6% state tax?

                             for face value it seems  a californian would fare better,  but then there some tax idiosyncracies that i may not be aware of that would favor a player from georgia.

                            i am talking about  a lump sum after tax jackpot (mega millions).

                            thanks,

                             VISION

                             

                                        "i am .........."meant to"       

                            P.S.,  that RJoH  is a stand up guy.  thanks,  vision

                                     until further notice,  it's  france everyday

                              dvdiva's avatar - 8ball

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                              Posted: June 30, 2005, 2:14 am - IP Logged

                              Depends. In washington there is no income tax on the lottery or investments. CA may not get the cut on the lottery winnings but will from any investment made. Only problem with WA I have figured out is a very low winnings on the 2nd numbers if someone wheels in WA. Sales in WA are lower than any other state in Mega so a pari-mutuel prize would be really small if split 41 times.

                              But than again cash is cash. I would much rather have 6% taken out of  a big pot than not winning the pot at all.