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Mrcoolsoul

United States
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April 12, 2002
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Jul 4, 2002, 8:48 pm

Friday's jackpot will be worth roughly $68 million after taxes...

...I dunno about you, but I think collecting a $2 and a half million dollar check every year for 26 years doesn't sound like a bad idea to me.
MrHappy

United States
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April 24, 2002
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Jul 4, 2002, 9:17 pm

Actually, taxes will almost certainly keep going up on the higher tax brackets. I find it unlikely that the top brackets tax cut sceduled 5 or 6 years from now will actually happen. Taxes will just keep going up for most people. I'm guessing that your $68,000,000 guess will actually end up being around $40,000,000 after 25 years of new tax rates. If you ever win more then $5,000,000, take the lump sum and run.
EZMoney

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June 22, 2002
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Jul 4, 2002, 9:26 pm

exactly!

http://www.lotterypost.com/thread.aspx?tp=168590&q=ezmoney+powerball&rp=search&get=960653
Mrcoolsoul

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April 12, 2002
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Jul 4, 2002, 9:31 pm

I was thinking that the jackpot will get taxed once(right after it's won). With annuity, is there a %27 fed tax and also whatever the state tax is(where applicable) taxed every year for 26 years?
EZMoney

United States
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June 22, 2002
418 Posts
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Jul 4, 2002, 9:48 pm

you are taxed on whatever your payout annually is. example=$26M over 26 years =$1M a year -state and federal taxes. so for 26 years you clear about $700K/year, more or less depending on where you live.

http://www.lotterypost.com/thread.aspx?tp=168590&q=ezmoney+powerball&rp=search&get=960653
visiondude

light on my feet
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May 20, 2002
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Jul 4, 2002, 10:06 pm

to someone who makes let's say $45,000 a year, a annuity of a million or so every year sounds incredible. certainly if handled right it is all the money a person could ever need. you would have enough left over for your favorite charity (friends , relatives , charities and mr. happy). but that is not the point. it is a not a matter of greed, it is a matter of good economics. just three points alone do not make sense for an annuity. (1) you could be 18 years old and "think" that you have 26 years ahead of you. the fact is that you are not guaranteed you are going to live to see "all" your $$$. (2) the tax structure for an annuity that is "Inherited" by your surviours is downright ugly. they have to pay tax on ALL the remaining $$$ left in your winnings, not on your yearly annuity. because the tax rate is so great (the amount which is fully payable immediately by your heirs upon your death), some heirs could not even pay the tax and ended up losing the lottery winnings that were "willed" to them. (3) you do not get to chose the annuity "vehicle", it is chosen for you and is subject to change. this whole matter boils down to proper control of your $$$. with cash option you get all your money "up front". from there on out it belongs to you to do as you please. you can invest it as you want. you can be agressive or conservative or any combinations thereof. suddenly there are many options were with annuity you have only one. one of the best reasons that make economic sense for cash option is that it is more easily transferable to your heirs thru structured trusts. they are many ways and variations to do that and there are far less tax implications and the transfer just goes eeasier with less of the govt's fingerprints on YOUR money. with cash option you can do all you want to do NOW. you don't have to wait 26 years. if your'e "afraid" of that much money at one time that is simple. have your accountant "tie it up" for awhile until you can. in the meantime you still have all your money. cash option = more control , less estate tax implications., financial flexibility. if i had no other choice, sure i would take the annuity. but given the choice, it would be financially "foolish" to not take CASH OPTION.....v - dude

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

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

until further notice, it's france everyday
MrHappy

United States
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April 24, 2002
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Jul 4, 2002, 10:38 pm

I think the max federal bracket is something like 39%. I'm pretty sure $1,000,000 per year would fall into that. State income taxes can range from 0% to 11% (at this moment). And there could even be county and city income taxes (if not today, sometime in the next 25 years). You may have your taxes raised big time for a 'Hillary' healthcare plan and Social Security type programs...and not qualify for them because you made too much money! I think those poor Enron and World.com Ex-CEOs can't get unemployment benefits (even though they paid into the system), because they made to much money previously! Well, try to keep yourself from crying for them! 25 years from now you may be paying 70%, 80%, or 90% percent in Federal, state, county, and city income taxes. Oh, and 10% to the United Nations. Oh...and let's hope we never join an interstaller multi-planet 'FEDERATION'! (;> Just take the money and run!
Mrcoolsoul

United States
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April 12, 2002
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Jul 4, 2002, 10:52 pm

Receiving an annual check of a portion of the jackpot is, in the eyes of Uncle Sam, the same as making an income. Right? In that case they get to throw down a %27 fed tax every year you get your check and also the state, local and county get a share too(where applicable), whereas these entities only get to eat just ONCE when you choose the cash option. Am I right or am I right.
MrHappy

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April 24, 2002
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Jul 4, 2002, 11:32 pm

It's definitely considered income. And 27% is the starting rate on lottery winnings of $5000+. If you win a $5000 from the lottery and make no additional income, the Fed will give most/all your money back because you are in the low tax bracked. If....I mean when, TheRock win his $500,000,000+ jackpot, he will have 27% Fed tax taken out before he even looks at his tickets to see if he has won. And because he would be in the max tax bracket, he would have to pay an additional 12% percent income tax when he files for the year. And if there is a state income tax, it's taken out before you or TheRock even looks at his ticket. And if you take the 26 years of 'income' payments, you may be hit by all kinds of increases of taxes. And let's say you own 4 homes in 4 states, the 4 different state, county, and city tax boards may go after you for their 'fair' share of your income. And that's not including the 'fifth' state that you actually won your money in. Take the cash and run! Unless it's only a few million.
visiondude

light on my feet
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May 20, 2002
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Jul 4, 2002, 11:35 pm

exactly right, let the "big dogs" eat just once. then you are a free man. let's say mr. "happy" is marginally right with some of his paint sniffing induced rambling's on were our economy and tax scenarios are headed. if you take the lump sum it is yours. if you didn't like they way our govt was going, you could go "somewhere" else with your money (another country). can't do that with an annuity, you are stuck. gives new meaning to "take the $$$$ and run !!!
........v - dude

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

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

until further notice, it's france everyday
visiondude

light on my feet
United States
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May 20, 2002
2,744 Posts
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Jul 4, 2002, 11:42 pm

that is brilliant, just how do you move in and out of conscienceousness so quickly. that is amazing. one minute you make no sense and then all of a sudden you are a walking medical miracle expounding the truths of lottery lore. i am not sure if i smell "what you are cooking", but you are entertaining.........v - dude

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

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

until further notice, it's france everyday
visiondude

light on my feet
United States
Member #356
May 20, 2002
2,744 Posts
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Jul 4, 2002, 11:53 pm

all interested parties go to: (not you mr. happy, i know you don't believe you will ever win so it would be a waste for you (jk)
www.biggamelottery.com/jackpot.htm
this gives a breakdown state by state regarding the amount of the current "jackpot" and the net amount (less taxes) from each state in the big game/mega-millions. it gives net figure for the annuity (which we know that no one here will choose anyway) and the cash lump sum. that should answer your "tax" questions............v - dude

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

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

until further notice, it's france everyday
EZMoney

United States
Member #415
June 22, 2002
418 Posts
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Jul 5, 2002, 12:08 am

there is no doubt you will be taxed to death if you hit the BIG ONE. how do you think we pay for all those bombs. but yeah taxes are incredible.

http://www.lotterypost.com/thread.aspx?tp=168590&q=ezmoney+powerball&rp=search&get=960653
CASH Only

United States
Member #379
June 5, 2002
11,294 Posts
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Jul 5, 2002, 2:20 am

Whether it's $500,000 or $500 million, ALWAYS choose lump sum (here in NY you _still_ must choose when you PLAY).

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