Everything you need to know about the Powerball Lottery and taxes. Is it your dream to be one earth’s richest people? Then it might be a good idea to participate in the Powerball Lottery. It has the highest Jackpot of all lotteries. Actually, in 2016 it broke its own record with a Jackpot of 800 million dollars, unbelievable!
Annuity or lump sump?
Interesting about annuity is that the payments increase over time because of inflation. It might be a reason to pick this option. However, it’s also possible to receive the money all in once, instead of intervals. This is known as the ‘lump sump’ option. Interesting is that most winners chose this option. It makes it easier to purchase a house, boat or something else that costs more than 17.5 million dollars. You don’t have to wait for it. On the other hand, you need to pay more taxes if you receive a large sum of money at once. There’s also a tax when you make an investment. Annuity and lump sump both have their advantages and disadvantages, write them down if you want and take the time before you make a decision.
In 30 years 1/29e of your prize money will be added to your bank account. The sum is adjusted for inflation, which influences the amount of money you receive. For example, 1 percent inflation means that the term you receive in a certain year will be increased with 1 percent as well. In 29 years you’ll receive a large sum of money every year. However, as an American citizen you do need to pay income tax. Single persons who earn more than 415.050 dollars a year need to pay 39.6 percent taxes over it. The tax percentage is the same for married couples or people who are living with a partner when they own at least 466.950 dollars a year.
Less money with lump sump
After paying taxes you can keep 480 million dollars on your bank account, so you have nothing to complain about. In 30 years you have it all! It’s important to know that you receive less when you want to receive the large sum of money immediately. In that case you 496 million dollars out of the 800 million will be added to your bank account. You need to pay 25 percent lottery taxes though, which is 124 million dollars in total. In the end you keep 372 million dollars.