Kinda has a stench of "the wealthy get taxed too much 😢"
The IRS doesn't get that money. The IRS processes that money and prevents your lottery-ticket-buying-ass from hoarding it all, and redistributes some of that unnecessary wealth to the utilities and services were all invested in together as a society.
If only actual billionaires got taxed that much...
This is what happens if you take it out as a lump sum. If you choose to take your winnings over an extended period of time (20 years or something), it is taxes more like income.
That said, I totally agree with you!
A significant amount is "lost" when you get immediate payout versus the annuity. The lottery will invest and be able to pay out more over the thirty years, thus they offer less the the lump sum
On 1.2 billion over 30 years, the average tax rate will not be significantly different year to year vs the avg tax rate on a lump sum.
The poor smuck probably claimed the lottery as an individual. He should have opened a company and claimed the ticket so that he can expense out a lot of his taxable income
/s
I am 99% sure this is not how it will work in this specific scenario but does otherwise when it’s business as usual.
For the last time, you can't tax net worth.
Sadly, the IRS isn't properly staffed or equip to go after rich people...
Yeah good thing they take it from lottery winners up front.
I heard this eloquent way of saying it the other day:
The IRS doesn't have the money to go after people with money.
Like schools
Ackchyually...
So we do all realize that advertised jackpots are annuitized amounts and that the vast majority take the net present value lump sum, which is usually about half the advertised amount, right?
Winner probably got about six hundred million, of which roughly forty percent was taken for taxes give or take state income tax rates.
Not being from the US I didn’t know that. That takes something from being completely unreasonable to be understandable.
I can’t believe some fake rich guy on the internet lied to us!
Still, if they’re not idiots the winner doesn’t have to work again so they’re still good.
That takes something from being completely unreasonable to be understandable.
Why would taxing a gross income of above a billion US$ by ~66% be "completely unreasonable"? Imo taxes for such incomes should generally be higher if anything.
Because that’s not how it works. It would be great if that was how it worked for all billionaires but it isn’t.
Taxing 66% of the winnings of someone who was previously not wealthy is unreasonable if you don’t also tax other rich people at the same rate.
Yeah, obviously that should go for everyone. I realize it's currently not very realistic in most countries, but I maintain that it would be reasonable. It's also not without precedent, even the extremely capitalist US had top income taxes of above 90% from the mid-40s to the early 60s.
When you win the lottery you have two options:lump sum or annuity. If you take the lump sum you basically get half the advertised amount and then pay taxes on that. If you take the annuity, you are paid out over 30 years and you pay taxes on each payment. It's also setup where they pay you more each year over the pay period.
If you go to USA Mega, you can see jackpot analysis for PowerBall and Mega Millions where you can see the complete breakdown on the payments.
You can take a lump sum payout or get it paid to you over 20 years. The lump sum is usually around 60% as the other poster said.
If you live in Canada as well lottery winnings aren’t taxed so you get the whole lump sum. Other countries probably vary too
I don’t think that you are taxed on lottery winnings in the UK either.
I did not know advertised jackpots were annuitized. Thanks!
Congratulations to the lottery company who was allowed to advertise a $400m prize as $1.28b.
Yep, that's the real issue!
Over here it's not taxed so prizes are smaller but they represent reality!
where? In Europe (euromillions) only prizes below 5k are exempt of taxation everything else is taxed 20%
In Canada
ok, nice!
You'd get significantly more if you didn't take it in a lump sum
Damn, only half a billion dollars you didn't have before. Might as well not even bother.
Is it even worth collecting the prize at this point?? /s