For example, if you win the powerball or mega million lottery then you have to pay taxes. But how much is the lottery tax on these jackpot prizes?
When there’s a Powerball draw, there’s a little bit of madness in the air. Not a big surprise, if you realize that there are Jackpots who contain hundreds of millions of dollars! In August 2017, the Powerball Jackpot was an incredible 700 million dollars. The lucky winner does need to pay taxes afterwards though. How much exactly?
How much tax did i have to pay after winning the Powerball jackpot?
In August 2017, the Powerball Jackpot increased from 650 million dollars to 700 million dollars. Incredible! It was one of the highest Jackpots in the history of Powerball. However, the winner does not receive the total sum of 700 million dollars. This is because of the fact that taxes need to be paid. The winner has to pay 25 percent to the government. For people abroad the tax percentage is even 30 percent. As a winner you probably don’t complain though. You still keep 308.8 million dollars. However, don’t forget that you only receive this huge amount of money if you choose for the so-called ‘annuity’ option. This means that you receive the prize money in intervals. 17.5 million dollars will be paid to you every year. After 30 years you’ve received everything.
Payed out in intervals?
800 million dollars is an amount of money almost impossible to comprehend, but there’s a catch. The person who wins the million needs to pay taxes. So it’s not possible that 800 million is transferred to the bank account immediately. Besides that, the American Powerball Lottery pays out in intervals. This option is also called ‘annuity’. This means that you don’t receive the money all in once, but over the years. By doing so, you cannot spend your money in just a few years. Simply enjoy the large sum of money you receive every year. It is possible to receive the money all at once though, also known as ‘lump sump’. Contact the lottery, and they will pay you everything. This is a good idea when you’re older or when you want to purchase a big house, for example.
Taxes per state
The state where you live also plays an important role regarding to taxes. Some states don’t use taxes for lottery winnings, which definitely benefits you. If you live in New York you need to pay a lottery tax of 8.82 percent though! You don’t have to look into the taxes if you live in Hawaii, Mississippi, Nevada, Utah, Alabama and Alaska though, because these states don’t sell Powerball tickets. So purchase your tickets somewhere else if you really want to win the Powerball Jackpot.