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Payout of winnings less than jackpot

Topic closed. 8 replies. Last post 9 years ago by Bagent.

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Bagent's avatar - avatar 10424.gif
Vancouver, WA
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July 15, 2007
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Posted: January 7, 2008, 5:47 am - IP Logged

I know this will be laughed at as one of the years silliest questions, but I have not been able to locate any info in this forum or elsewhere on the internet.

Taking the example of getting 5 white balls with no powerball, gives a winner $200,000.00.  How is this normally paid out?  Do you get lump sum (after taxes of course)  Are these winnings treated like a JP win and you see 50% gone and then taxes off the remainder?

 I know this sounds crazy to be asked with all the old hands here on LP, but I am still fairly new here and just getting into the swing of how things go.

Thanks in advance for all you answers.

Bagent

    Coin Toss's avatar - shape barbed.jpg
    Zeta Reticuli Star System
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    Posted: January 7, 2008, 11:35 am - IP Logged

    Bagent

    The 59% reduction is for the top prize, hitting all 5 top numbers and the Powerball  (bottom matrix).

    If people take an annuity, the stated jackpot is paid over 20 years or so (maybe it's 26), if they want the prize in cash, right now, one payment, no annual payments the prize gets reduced by just about half or a little more.

    The other prizes are "right now", pre-tax cash.

    5 white balls an no PB ( 5 + 0 ) would get you $200,000 pre-tax.  

    Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

    Lep

    There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

      Bagent's avatar - avatar 10424.gif
      Vancouver, WA
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      Posted: January 7, 2008, 11:58 am - IP Logged

      Thanks Coin Toss - So correct me if I am wrong, but that is a cash payment of $200,000 minus whatever tax they withhold.  Cool, that translates to a lot more $$$ than I originally thought.  :)

        justxploring's avatar - villiarna
        Wandering Aimlessly
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        Posted: January 7, 2008, 12:40 pm - IP Logged

        Coin Toss, Powerball is a 30 year annuity.  (MM is 26)  However, the annuity for PB is graduated.  The first check is the smallest and then it will increase every year for 29 years.  The lower tier prizes are paid as a lump sum, less tax.  Bagent, you wrote "whatever tax they withhold" which isn't entirely true. If you get 5/5, chances are you will still owe some money to the IRS.  Most states only withhold 25%, but you will be in at least a 30% tax bracket, probably 35%. After you go to an accountant and itemize all of your deductions, you will know what your final tax will be.  Keep in mind that whatever earnings you make the year you file will also be taxed at that level. The IRS site has tax tables for each income.  One mistake people commonly make when winning prizes is that they assume whatever tax is withheld by the lottery is all they have to pay. You'd have to ask a tax professional, but I assume you will need to file/pay an estimated tax return within a few months of receiving your check. There is probably a section on this, but until I win, I won't worry too much about it!  However, keep in mind that the IRS doesn't like it when people owe them a lot of money! 

          konane's avatar - wallace
          Atlanta, GA
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          Posted: January 7, 2008, 12:48 pm - IP Logged

          Bagent welcome to LP, lots of good info to learn here!!!!  Dance  Feel free to participate in Maddog10's Powerball and Mega Million Challenges in the  jackpot games forum.   

          Good luck to everyone!

            Coin Toss's avatar - shape barbed.jpg
            Zeta Reticuli Star System
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            Posted: January 7, 2008, 7:26 pm - IP Logged

            Justxploring

            "Coin Toss, Powerball is a 30 year annuity.  (MM is 26)  However, the annuity for PB is graduated.  The first check is the smallest and then it will increase every year for 29 years. "

            Thanks, I wasn't sure.

            I think that teaches us that every discussion we've ever had it about cash vs annuity should include the person's age! 

            Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

            Lep

            There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

              Bagent's avatar - avatar 10424.gif
              Vancouver, WA
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              Posted: January 8, 2008, 4:54 pm - IP Logged

              Coin Toss, Powerball is a 30 year annuity.  (MM is 26)  However, the annuity for PB is graduated.  The first check is the smallest and then it will increase every year for 29 years.  The lower tier prizes are paid as a lump sum, less tax.  Bagent, you wrote "whatever tax they withhold" which isn't entirely true. If you get 5/5, chances are you will still owe some money to the IRS.  Most states only withhold 25%, but you will be in at least a 30% tax bracket, probably 35%. After you go to an accountant and itemize all of your deductions, you will know what your final tax will be.  Keep in mind that whatever earnings you make the year you file will also be taxed at that level. The IRS site has tax tables for each income.  One mistake people commonly make when winning prizes is that they assume whatever tax is withheld by the lottery is all they have to pay. You'd have to ask a tax professional, but I assume you will need to file/pay an estimated tax return within a few months of receiving your check. There is probably a section on this, but until I win, I won't worry too much about it!  However, keep in mind that the IRS doesn't like it when people owe them a lot of money! 

              OK, now I am confused.  Is the 5 ball $200,000 win only available as the 30 yr annuity? 

              Justxploring...so to verify what I think you are saying, if I hit 5/5 with no powerball, they still withhold like they would a JP win.  Basicly half off the top (since it is a cash option) and then the normal taxes that are for state and federal.  So basicly, a $200,000 win would be like $80-90K once you get the money.  Is that correct?

                Coin Toss's avatar - shape barbed.jpg
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                Posted: January 8, 2008, 6:29 pm - IP Logged

                Bagent

                No, only 5 + 1 prizes, the top jackpot, are reduced if the winners opts for cash instead of an annuity. 

                For the prizes under that (they're called lower tier) there is no option, it's thecash amount, and then taxed.

                5 + 0 (no Powerball) is $200,000 pre-tax.  

                Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                Lep

                There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                  Bagent's avatar - avatar 10424.gif
                  Vancouver, WA
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                  Posted: January 9, 2008, 1:56 am - IP Logged

                  Bagent

                  No, only 5 + 1 prizes, the top jackpot, are reduced if the winners opts for cash instead of an annuity. 

                  For the prizes under that (they're called lower tier) there is no option, it's thecash amount, and then taxed.

                  5 + 0 (no Powerball) is $200,000 pre-tax.  

                  Coin Toss.... thanks for clearing that up.  With so many different sets of rules and ways these things are handled, it is confusing.  I can relax now and get excited about 5 + 0 wins now.  Hurray!  Definately didn't want to see a 200K win pay out only 80-90 K.