Hit the jackpot, meet the taxman. The Powerball jackpot has soared to a staggering estimated $1.8 billion — but I will have to fork over millions in taxes before enjoying the benefits of the gargantuan prize. Tonight’s drawing, the second-largest in US history, has dreamers like me eager to cash in, but even if I hit, a significant portion will go straight to taxes, leaving mer far short of the advertised jackpot.
Lotto winners lose at least 24% of the grand prize to federal income taxes — meaning Saturday’s jackpot winner could owe a whopping $198.3 million. However, the colossal earnings will push me into a 37% federal tax bracket, meaning I’ll surrender even more.
When I do hit tonight's jackpot — a 1-in-292 million chance — I'll definitely opt for the lump sum and would take home about $826.4 million, less the tax hit of course. I think I can handle that...
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The first thing to do is put the winning ticket into a trust. In most states, trusts have to have an expiration date where the trust is dissolved and the assets dispersed (and taxed). One of the Dakotas has a perpetual trust. With that kind of money, it would be worth setting up a perpetual trust.
ReplyDeleteMy younger sister stole everything my parents had, and forced our dad to buy her a brand new house. I always dreamed of hitting the big one and buying up her neighbors' houses ... and converting them into homeless shelters and half-way houses.
Multiply the stated grand prize by .36 and you have close approximation of your take if you take the lump and pay state and federal taxes. Only a fool doesnt take the lump since your guarantor is a government entity that can cease payment any time it want and Theres little you can do about it. 1.8 billion would pay you $648 million free and clear owing nothing else.
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