The Chip Board
Custom Search
   


The Chip Board Archive 13

Re: The $164.4 M is after Federal Taxes. The State

I disagree. The cash option is about half of the jackpot amount because you are electing to take cash up front instead of allowing the jackpot amount to earn interest as payments rae made out over 29 years. The amount quoted for the cash option does not include any withholding for federal income taxes.

The national Powerball site has a FAQ that states:

"IS THE CASH AMOUNT THE JACKPOT AMOUNT AFTER TAXES?
No. When we advertise a prize of $100 million paid over 29 years (30 payments), we actually have less than $50 million in cash. When someone wins the jackpot, we take bids to purchase government securities to fund the annuity prize payout. If the winner wants the annuity, we invest the $50 million in cash to fund these payments. The winner gets the cash plus the interest earned. When you see an estimated jackpot annuity prize, we are guessing both what the sales will be and what the market's bond prices will be. The annuity jackpot amount and the cash jackpot amount that we announce area always estimates.

Federal and State Income tax apply to whatever amount you actually receive in a given tax year. If you take the cash amount (say $50 million), then you pay income tax on $50 million). If you take the annuity (say $100 million), then you pay income tax on the money you actually receive each year."

"CASH VS. ANNUITY - MY FINANCIAL EXPERTS SAYS HE CAN EARN MORE THAN THE ANNUITY WITH THIS CASH.

We have seen that even financial experts forget about taxes. From the example above, if the winner takes the cash, then the winner will have to pay state and federal taxes on the cash amount. The amount of income tax will vary, but it will likely be somewhere close to half the cash amount. With $50 million as a cash prize, a cash winner will have less than $30 million to invest. We don’t pay any income tax and so start out by investing the whole $50 million.

Sometimes financial experts also do not understand how the annuity prize is paid out. We do not hold the prize for 29 years and then pay it all out. The winner gets the first payment immediately and then an annual payment for the next 29 years. And this is guaranteed. It is possible to beat this income stream, but not without risk."

Messages In This Thread

Question: If you won $340 million...
Re: Question: If you won $340 million...
$2m and then donate to the club
I would buy the Platinum Collection and...
That $164.4 M is after taxes.
Re: That $164.4 M is after taxes.
The $164.4 M is after Federal Taxes. The State
Re: The $164.4 M is after Federal Taxes. The State
Your Right, I stand corrected. Thanks.
Re: The $164.4 M is after Federal Taxes. The State
Re: The $164.4 M is after Federal Taxes. The State
Re: The $164.4 M is after Federal Taxes. The State
Lottery winnings are exempt from state tax in N.J.
2 words...Lap Dances
If you win, I have 2 questions...
Here's my plan...
vbg BUY ME THE "SPLASHBAR" & vbg vbg
Re: one helluva convention thats for sure!
Re: Question: If you won $340 million...
Re: Question: If you won $340 million...

Copyright 2022 David Spragg