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by Santaanacanyon on July 18th, 2003

Santaanacanyon

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If I should win the lottery, how much of the money do I actually get to keep...after taxes?

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Answers. 10 helpful answers below.

  • by d5kenn on September 6th, 2003

    d5kenn

    Not accounting for inflation over the payout period, it depends on the federal and state tax rates charged. Federal is ~25-28%, state varies from 4-8% IIRC. In general, the rule of thumb is that you get more than half and less than two-thirds.

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  • by skippy1234 on August 2nd, 2011

    skippy1234

    If you win...you have 180 days to claim your prize. Immedately!! I mean immediately establish residence in a non state taxed state (eg. Nevada, Tennessee, Florida) this will save you roughly 8%. Doesn't seem like much...but 8% of 60,000,000 is 4,800,000 more if your state has a special income tax for going over a certain income level. Thru the Feds you will still eventually be taxed roughly around 40%. But remember to set up your residence like that day!! that is why you have 180 days to claim your prize. not 181 days or a whole year. if you delay on your new residence they will look at where you have lived the last year and where you lived the majority of your time is where you will be taxed.

    what to do w/ the money after you win. Well put a small cushion into 3 or 4 banks, roughly $65K in each bank....never more than $100K. Put the rest into 3 or 4 dividend paying stocks that are rock solid like Verizon (5.4% dividend) AT&T (5.8%) dividend and so on. Split your money between 3 to 4 of these type of stocks and reinvest your dividends in all but one of these stocks and choose to receive your money in the form of checks or direct deposit from one of these dividend paying stocks. You will receive payments either every 3 or 6 months and not have more money than you know what to do with.

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  • by optiflex on February 28th, 2007

    optiflex

    I should add that people get the 28 percent figure from the "taxes on winnings" laws, and don't take into account that once you go over a certain income level, you owe the extra "income tax" for that bracket.Of course this info is given to you if you do win. Its just that the Lotteries like to go with the lower figure in advertising prizes won.

    Think of it like this...when they say somebody like Julia Roberts gets 20,000,0000 a picture, they don't bother to say, she only nets 12,000,000!!

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  • by optiflex on February 28th, 2007

    optiflex

    depends on the amount of the prize.

    Lets say you won 100,000,000.00 in a lump sum.

    You would be taxed almost 40 percent.

    so you'd get around 60,000,000.00

    This is slightly less than the current powerball jackpot would get you(65-70mil), if you won it all by yourself. Don't be fooled by the "announced" after taxes figure they would say in the media. That's always based on 28 percent, they hit you up for the rest by April 15th, the following year.

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  • by Possum on December 5th, 2007

    Possum

    If you win considered not telling a soul and getting on the plane to the Caymens or another tax haven and finding a lawyer.

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  • by fresh33308 on January 15th, 2012

    fresh33308

    The amount you get to keep (lump sum) is based on 2 calculations; the real amount in the pot and the amount after tax. Nearly every response I have seen is way, way wrong.

    The real amount in the pot is based on the present value of the payments listed from the gross estimate advertised over a 30 year period at some unknown interest rate. Currently, the safe interest rate is about 4%. That is to say: Divide the estimated total by 30 and then take the present value of those payments over 30 years. Example: The current powerball estimate in Florida for 01/14/12 is $80 million. Annual payments (don't know why anyone would pick annual payments) is $2,667 thousand (rounded). The present value of those payments at 4% is $47,956,500 and represents you before tax winnings. Then come the taxes. Federal is just under 35% and state tax varies. In Florida, there is no tax so lets use 35% because any deductions you are allowed to keep are not material. Then, your take home is 65% (100 - 35 tax) on the $47, 956,500 or $30,692,200 which, equals 38% net winnings after tax. In short, the rule of thumb is: If you have state tax, divide the total jack pot by 3 and that is what you will get. If you have no state tax, multiply the jack pot by 4 (and divide by 1,000) and that is what you will get. Oh, how those winnings go down. Note: Look at the rules on the back of your ticket very carefully. In Florida, you only have 60 days to claim the power ball for a lump sum payout.

    What you do with the winnings is not the question; but, how many below are hell bent on telling you what to do as if they really care about you. When you win, you can ask me at fresh33308@yahoo.com. However, know up front, I will suggest you get off the grid with no investments or anything you have to think about. Put the money in tax free savings at 4% and there is no need to file any more - enjoy the money, not have to try and make more for greed sake as it will come back to you.

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  • by ms_chuck.littles on August 2nd, 2011

    ms_chuck.littles

    Wow, very good question...I never thought of that...

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  • by MrWitch on August 2nd, 2011

    MrWitch

    In the UK, you keep all of it.

    But put it in the bank to live off the interest and the nice government will take 40%, currently.

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  • by fresh33308 on January 15th, 2012

    fresh33308

    Share your answer...

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  • by DumbASH on December 4th, 2007

    DumbASH

    A better rule of thumb is you take the cash value the prize is about 1/3 of the total amount.

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