Welcome Guest
Log In | Register )
You last visited December 2, 2016, 5:18 pm
All times shown are
Eastern Time (GMT-5:00)

Cash option and taxes

Topic closed. 42 replies. Last post 8 years ago by eproducer.

Page 2 of 3
PrintE-mailLink
Avatar
San Diego, CA
United States
Member #58386
February 12, 2008
287 Posts
Offline
Posted: April 20, 2009, 4:54 pm - IP Logged

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

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 increases sales.

 

The bottom line is that it is deceptive. 

 

At every store in California that sells lottery tickes, there is a sign that displays in large numbers the jackpot amount for Mega Millions.  Only in the fine print does it state that it is an annuity amount.  How many people take the time to read the fine print at the bottom of the sign?

 

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.

Do you think that would be allowed by law?  No.


    United States
    Member #58528
    February 18, 2008
    710 Posts
    Offline
    Posted: April 20, 2009, 5:14 pm - IP Logged

    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 increases sales.

     

    The bottom line is that it is deceptive. 

     

    At every store in California that sells lottery tickes, there is a sign that displays in large numbers the jackpot amount for Mega Millions.  Only in the fine print does it state that it is an annuity amount.  How many people take the time to read the fine print at the bottom of the sign?

     

    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.

    Do you think that would be allowed by law?  No.

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

      GamerMom's avatar - tails

      United States
      Member #60535
      April 21, 2008
      460 Posts
      Offline
      Posted: April 20, 2009, 5:31 pm - IP Logged

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

      well that was just rude and unnecessary


        United States
        Member #58528
        February 18, 2008
        710 Posts
        Offline
        Posted: April 20, 2009, 5:41 pm - IP Logged

        well that was just rude and unnecessary

        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!!!

          RJOh's avatar - chipmunk
          mid-Ohio
          United States
          Member #9
          March 24, 2001
          19815 Posts
          Offline
          Posted: April 20, 2009, 5:53 pm - IP Logged

          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 increases sales.

           

          The bottom line is that it is deceptive. 

           

          At every store in California that sells lottery tickes, there is a sign that displays in large numbers the jackpot amount for Mega Millions.  Only in the fine print does it state that it is an annuity amount.  How many people take the time to read the fine print at the bottom of the sign?

           

          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.

          Do you think that would be allowed by law?  No.

          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.

           * you don't need to buy more tickets, just buy a winning ticket * 
             
                       Evil Looking       

            four4me's avatar - gate1
            MD
            United States
            Member #1701
            June 18, 2003
            8359 Posts
            Offline
            Posted: April 20, 2009, 6:26 pm - IP Logged

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

            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 million dollar pot could grow another couple million or more after they they have announced the estimated amount on the website.

            Big John says. You don't hit the number. The number hits you!!!!

                           I'm not Big John, I'm Four4me, Big John's a friend.

              United States
              Member #58528
              February 18, 2008
              710 Posts
              Offline
              Posted: April 20, 2009, 6:39 pm - IP Logged

              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 million dollar pot could grow another couple million or more after they they have announced the estimated amount on the website.

              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.

                Avatar
                Kentucky
                United States
                Member #32652
                February 14, 2006
                7295 Posts
                Offline
                Posted: April 23, 2009, 10:32 am - IP Logged

                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 million dollar pot could grow another couple million or more after they they have announced the estimated amount on the website.

                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 $155 million annuity.

                  Avatar

                  United States
                  Member #73512
                  April 16, 2009
                  106 Posts
                  Offline
                  Posted: April 23, 2009, 12:14 pm - IP Logged

                  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.

                    DC81's avatar - batman39
                    MI
                    United States
                    Member #54830
                    August 31, 2007
                    985 Posts
                    Offline
                    Posted: April 23, 2009, 1:45 pm - IP Logged

                    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.

                    You can't predict random.

                      Avatar

                      United States
                      Member #73512
                      April 16, 2009
                      106 Posts
                      Offline
                      Posted: April 23, 2009, 2:27 pm - IP Logged

                      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.

                      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 because I'd want as much money ASAP, but still... the fact that winning one million dollars would only mean you would get a third of it if you take it up front, sucks.  One million dollars still would have it's limits, 350 would have even more limits. 

                      I guess this is more political since I absolutely despise how the government taxes everyone and gives nothing in return. 

                      Also, I have to ask, why would taking the cash option be better for the mega millions?  I would think that either way would be fine.  6 million a year is nothing to scoff at, even with taxes, and wouldn't you get more in the end?  I would take the cash option if the jackpot was less than 5 million, but I would think with such big money as the megamillions, an annuity would be safer.


                        United States
                        Member #58528
                        February 18, 2008
                        710 Posts
                        Offline
                        Posted: April 23, 2009, 2:46 pm - IP Logged

                        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 because I'd want as much money ASAP, but still... the fact that winning one million dollars would only mean you would get a third of it if you take it up front, sucks.  One million dollars still would have it's limits, 350 would have even more limits. 

                        I guess this is more political since I absolutely despise how the government taxes everyone and gives nothing in return. 

                        Also, I have to ask, why would taking the cash option be better for the mega millions?  I would think that either way would be fine.  6 million a year is nothing to scoff at, even with taxes, and wouldn't you get more in the end?  I would take the cash option if the jackpot was less than 5 million, but I would think with such big money as the megamillions, an annuity would be safer.

                        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.

                          DC81's avatar - batman39
                          MI
                          United States
                          Member #54830
                          August 31, 2007
                          985 Posts
                          Offline
                          Posted: April 23, 2009, 5:19 pm - IP Logged

                          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 least they are when the jackpots are something like what the multi-state games provide.. Smaller ones where you're not going to be pushed into the highest tax bracket, eh. More of a push IMO but still you'll probably face your taxes being raised (and maybe lowered at points) more than once.

                          A million dollar annuity would probably be paid out at $50,000 over 20 years (40K if 25) so the cash option on it if it's at 20 years would be a bit higher than if it were for 25. Let's just say it's 25 years just so I can be lazy and use MM's annuity/cash value, right now I'd guess it'd be around 65% (as MM has been much of the time) of the annuity so you'd have $650,000, take off the 25% and the 4.35% for the initial taxes and you have $459,225 and you may be liable for another 10% which would end up being $394,225 though one would assume that you would have earned at least some interest or whatever on that money after you got it so it would be a little higher then there's deductions and a bunch of other factors. It's nothing to quit your job and go nuts over (doesn't stop people though) but it's a nice, very nice addition to your retirement nest egg. It still kind of bugs me that the million dollar winners are called millionaires because they're usually not even close, especially when they don't even start out with a million bucks. Then there's the follow up stories on how their lives have changed and the writer makes the story seem surprising in that the winner's lives haven't changed much.

                          You can't predict random.

                            Avatar

                            United States
                            Member #73512
                            April 16, 2009
                            106 Posts
                            Offline
                            Posted: April 23, 2009, 5:50 pm - IP Logged

                            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 away too).  Though I don't know if I'd trust it with just one bank, maybe 2 or 3 different banks instead.

                              pigsNtrees's avatar - pigsNtrees
                              Mallorn trees of Lothlorien
                              United States
                              Member #26084
                              November 14, 2005
                              199 Posts
                              Offline
                              Posted: April 23, 2009, 7:18 pm - IP Logged

                              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.

                              Quando Porca Volare!

                              drunk hobbit