Say someone won the Powerball this week at $111 million in South Carolina or Rhode Island (7% state).
The Jackpot Analysis says that there is a 25% federal tax, and then a 7% state tax, leaving you with...
$42,432,000
after taxes and lump sum.
Would you then at the end of the year have to pay the 35% federal income tax, which would bring you to...
$27,580,800.00
I just don't understand how much a person who wins this would ACTUALLY come away with after all taxes have been taken away? Could sombody please explain this?
Also, I read in another post that.... ( I know this is an old post, but will someone explain the Capped Federal Tax, because I have never heard of that... i'm young)
"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."
Thanks a lot.
Sam