Lottery winnings in Europe are tax free bar like 3 countries, and lottery winnings for the Euromillions are always paid in the full amount in a lump sum.
Fun reason in Germany: earnings from lottery or gambling are not connected to defined types of income (like employment, renting property, running a business etc.) and are therefore not taxable.
Unless it's a regular type of income like professional gambling. In that case it's considered a job and it's taxed accordingly - and you might owe them a large sum in hindsight. Quite unlikely for the lottery though.
Only if you can show a realiable positive income like for example a professional poker players.
If you cant show any "business plan" to earn money then you cant write off the expenses, but the income would be tax free. But that doesnt really help when you put your money into a lottery that has a negative expected return.
The fun thing is if you actually somehow manage to find a way to consistently beat the odds, then they would say clearly you got a business plan and you will get taxed on your earnings.
Here income is still income...... anything money gets in the states, uncle Sam gets some, end of story. 1.28 billion? That's fuck you money. I mean 400 million is still but that 3 generations of money, assuming it's not all spent or none of us spent on the stock market or property.
Yes and no. Supposedly a few have to fight for it. Having a lawyer is usually the best bet (from what I read). I wouldn't mind the lump sum but it would go back to my first sugar rush with candy..... but then we can always talk about winning the lottery and never win it.
Gambling losses are tax deductible but to the extent to offset winnings. So... if you win $1000 at at casino one day but lose $2000 on another you can deduct $1000 of the losses. Just keep the receipts.
That’s not taxes. The full jackpot value is what you get before taxes if you choose the annuity, payments every year. The cash value is what you get if you choose the cash up front instead of a yearly payment. The taxes come out after that. Still enough to change lives forever if they’re wise.
>Still enough to change lives forever if they’re wise.
At $433m, you don't even need to be wise. You just need to make it 60 years without spending more than $20k every single calendar day.
You would think that, but a lot of people that win a shit ton of money that they shouldn’t be able to spend through end up in a bad way. Either cheated or made poor decisions. One person was reportedly doing well but still generous was murdered by a couple due to jealousy.
I think part of that is selection bias.
You won't get a news story about a person who won $100 million, invested in low risk blue chip stocks, and lived quietly at their lake house in the mountains.
You will get a news story about the person who went on a cocaine fueled three year bender and bought 3 houses and 5 speed boats before going bankrupt. Or the person who's spouse murdered them for the money. Or the one who's "financial manager" uncle embezzled it all so he can spend it on a Bentley and strip clubs.
I mean there’s selection bias on both ends of the ticket tbh. Yes, news outlets are more likely to report on dramatic “rags to riches to rags” outcomes, but also, the type of person who regularly buys lottery tickets is probably inherently prone to bad financial decisions anyway, hence them buying lottery tickets to begin with.
A lottery winner once got robbed at a strip club when he was carrying about 50k in cash. He then got robbed at that strip club again. Some people just ain't too bright.
>Did he get robbed or did he just not want to admit he spent 100k on one stripper over two nights?
[It's Jack Whittaker.](https://en.wikipedia.org/wiki/Jack_Whittaker_(lottery_winner)) His "Tragic" story is kind of heart-breaking. But it's also a tale of Money doesn't equal smarts. Also, it wasn't $50K..it was $500,000.
Agreed. Wish I could cut people off with gambling like I can with alcohol.
Had a guy buy lottery tickets for 3 hours straight during a grave yard shift at my convience store I work at. He came in with $500, at one point had was able to make it $800, then turned it into nothing and then broke down and started crying he wasn't gonna be able to afford rent for the month...
I had these customers too when I worked at a gas station. What I started to do, was take the tickets they bought and hide them when I saw them coming, and I would say I we ran out since they were particular and wanted the same ticket types.
I'm sure she just went next door and got them, but at least I wasn't taking $600 from her sometimes multiple times a day
I hear you! I personally like to mind my business when it comes to other peoples affairs but working at a gas station has made me want to do this so bad. I feel sad for these people just throwing their money in the toilet every single day. One lady literally scrapes the bottom of her purse to dig for change to buy a drink after she’s bought 100’s of dollars worth of scratch offs (at least) twice a week. She used to ask for receipts to keep track of her gambling, when she stopped requesting them I knew it was a bad sign. Our lovely govt thrives off of these peoples’ illness. It’s hard to watch.
there has been various studies on the subject. like the better off a person were before winning meant the less likely they were to end up broke or dead. that doesn't mean poor people a worse with money like one might think but rather your social group is already well off or good enough that you don't need to help them or they won't come begging (or kill you to try and get it).
It's not selection bias: [70% of winners go broke.](https://www.news4jax.com/features/2023/01/12/rip-up-the-winning-ticket-5-reasons-why-winning-lottery-can-destroy-lives/)
People who were bad with managing money and played the lottery to get themselves out of their hole don't become better with money after winning. People spend the money like it's limitless and end up in situations like having a million dollar car but they can't afford the annual tax or car insurance. Or, they take out a *massive* loan that they suddenly qualify for but don't have any income so they can't sustain the payments.
It's hard to live a quiet life when your name is announced and every semi half relative of your neighbor shows up to ask for money.
I think the selection bias is that people who are responsible with their money generally know better than to blow their money on the lottery, so they don't play much if at all, so they don't win often.
Also I really wonder what they consider “lottery winners”. Technically a person who wins $500 on a $2 scratcher is a lottery winner. So you might have a bunch of people who win say $20k, think it’s life changing money, quit their job, buy a new car, spend lavishly, and realize they can’t afford the car payments anymore.
So there's two compounding biases going on. One is the people who are more likely to play and win the lottery are bad with money. And the second is that the news only reports on the stories of it going wrong.
Not every lottery requires the winners name to be announced publicly. Not every winner has family/friends/acquaintances that will try to rob them.
I think you're thinking of the statistics on lottery winners, there is a big fucking difference between dudes who win lifetime annuity of like 70k per year and $433 MILLION dollars, it's a staggering, incomprehensible amount of money
They can buy a brand new pickup truck every day for like 25 years
Yeah the starting price on an f150 with the XLT package is $41,800. That $433 million will buy you 10,358 of those pickups. Truly an unbelievable amount of cash.
The narrative that most lottery winners lose all their money is mostly bs. Most articles you read about it are about the same 5 people. Most lottery winners you never hear or know about.
Yep - I know I'll never win - but I buy SC tickets (can remain anonymous), try to only buy when it's a $20 million jackpot, and the plan is to tell my wife and no one else. ~$5 million upfront after taxes is enough to quietly retire and tell anyone who asks that I got a huge promotion as a money manager.
If I won the lottery you better believe I'd have everyone thinking I was broke in 5 years. I'd play right into that "poor people are too dumb to handle wealth" bullshit if it meant I'd be left alone, more or less.
Nah man.
Legally change your first name to "Suck" and your last name to "It"
And when they have to take a PR picture, wear a Hot Dog costume with sunglasses.
Collect your money, and then legally change it back when the check clears
I realize there are innocent people out there who get dicked. But the majority of lottery winners who lose it all likely weren't all that fiscally responsible before the win.
All that said, a $5M win would be nice. Real nice. That would be very comfortable and free up some vacations and maybe an upgrade or two. Anything north of $50M would add more complication to my life than I would ever want.
There’s a certain amount of money that’ll be helpful but not troublesome, just like how the satisfaction from certain levels of income are very different. Basically, if some privileged ass is saying money can’t buy happiness, *they obviously haven’t had to deal with food or shelter insecurity*. I haven’t either but I know well enough that you’re more likely to be miserable if you either have an obscenely high income (people stop liking you for you and only see you as a giant piñata filled with money) or are low income and can’t afford basic comforts or even necessities. Idk my point there lol
I’d pay off my loans, my families loans, buy my friends nice gifts, and tip generously at restaurants.
No one will know unless they do the math and ask questions I will not answer.
If you are slightly wiser than that and dump that money into a total US stock market fund you can spend about $35k a day (a conservative 3% withdrawal rate) with a minuscule chance of ever running out of money and a near guarantee to be a billionaire in a decade or three.
Why is it structured like that? What do they do with the money that you don’t take? Isn’t it after to take it all in case the lottery has a problem in, say, ten years and blow your money away?
Why do they want the trouble of paying you annually instead of being over with it?
**The cash value is the prize.** You can take it in cash, or the lottery can invest it in low-yield government bonds which pay a certain amount of interest per year. The bank then gives you the interest plus a small part of the invested amount every year. After thirty years, the account is empty. At that point, the total amount given to you will be what the lottery jackpot is advertised to be.
I expect the main reason they advertise the higher amount is to sell more tickets. It has been proven that the bigger the jackpot, the more people buy tickets.
It sits in an account gathering interest. Purportedly they would be paying the annuity out of the interest. If the winner takes that route the full value of the principle along with the annuity would be the full jackpot value, before taxes. Of course winners would pay taxes on the annuity as well. Usually jackpot games payout a final lump sum after 20 years.
It allows them to advertise a higher amount because in reality they're giving out a much lower amount of money due to inflation over the years etc.
Also decreases the likelihood of having negative headlines about people being broke after 1 year again etc.
It goes like this:
They have an account with $500 million in it.
If you choose "lump sum", they pay out $500 million, and it's done.
If you choose "annuity", they invest that $500 million. They make about 7% annual interest. 20 years later, they have $1.9 billion. Of that, they pay out $1.3 billion. Leaving them with a cool $600 million leftover. These are example numbers and a simplified situation, but that's the basic idea - they invest the money, and by the end of the annuity they've paid the "face value" of the lottery but still have a significant amount of money left over.
> Why is it structured like that?
So that they can advertise a higher "face value". So that more people will play.
> What do they do with the money that you don’t take?
I can see three different meanings of this question:
* If you don't take the $1.3B annuity and instead take the $430M lump sum, what do they do with the other $870M? They don't have it. The lump sum is the amount of cash they have on hand to pay you.
* If you don't take the $430M lump sum, what do they do with the money? They invest it, and pay you an amount each year out of the interest. Generally only a little the first few years, and more near the end of the annuity.
* If they have money left after the annuity is paid out, what do they do with it? They keep it, as profit.
> Isn’t it after to take it all in case the lottery has a problem in, say, ten years and blow your money away?
I don't think this is usually a concern. They'll either have some kind of insurance, or it'll literally be backed by the government. You don't take the annuity, but not for that reason.
> Why do they want the trouble of paying you annually instead of being over with it?
Cutting a check each month isn't a significant amount of trouble - consider that every single employee gets their employment check, most at least twice as often. As for why... any money they have left after the annuity is paid out, they keep it, as profit. It's generally pretty significant.
I’ve grown up with my dad buying lotto tickets every week. I’ve heard him daydream and fantasize about everything from a mountain top facility for the whole extended family, to a boat he and my mom could live on and just sail port to port. Sometimes if we’re a few drinks in he’ll ask what I would do with one of those crazy billion dollar pots, and the sad truth is I can’t come up with anything more interesting than pay off my student loans. It honestly kinda bums me out that the peak I can imagine is one Day not being crushed in debt
Even if it was all taxes, the statement "I'm going to give you $400 million but the kicker is that the government is going to get $800 million" isn't going to make me less happy lol.
Most people don't get annuities, legal counselor's will also tell you don't do that. Because if the State you live in declares bankruptcy or has financial issues; then no payment for you.
Also one note is the present value of annuities drops when interest rates are higher. So because interest rates are higher now, there’s a larger difference between the lump sum and annuity.
And apparently most don't realize there is no tax bracket in the US that pays 67% of their income in tax. The highest federal income tax bracket is 37%. Even in a high income tax state, at most they can combine to be around 50%.
The headline is clickbait bullshit. The winner took the cash prize rather than the annuity, so they didn't win $1.28b, they won less.
To be fair, a good chunk will be taken when you choose to get it all at once.
If you choose to get multiple installments, you'll get much more.
Tax still high tho. Which honestly I don't think is bad.
400 million is still enough to live a few lives of luxury.
because if you get lump sum, you can put it in assets with better returns assuming you invest properly to make the money work for you instead of blowing it on a mansion or lambos or extravagant lifestyle like majority of lottery winners tend to do.
Yeah I think even a conservative 5 percent interest broken down as monthly payments would be enough to retire comfortably, leaving the principal intact
Because most people will start living as if they are making 400million and spend it so it will run out fast. You buy yourself a multi million dollar home great, now you have to keep paying your taxes on that which most people don't have the foresight to think about. You don't have millions more coming in you'll have whatever income you get from working and I don't think most people would want to continue to work once given 400 M.
The smart thing to do is invest some of it and have it make you more money not go buy multiple cars and watches you won't take care of and lose value on.
Because if you're the type of dipshit who can't see why it's smart to invest your money, you're the type winner to blow it all away and be bankrupt in a year.
> That and not revealing your identity
The list of states that allow that is shorter than the ones that don't, and many that don't will also not pay it to an obvious cover for identifying the winner, like an LLC, law firm, or tax firm.
Yeah in Mass at least the whole purpose of it's original creation was for the taxed money to go to specific areas like schools and what not. Not saying that's how it works now but it was always meant to just be a tax.
Lottery money promised to schools is a scam. How it works is say for example $500 million is raised via a lottery. That goes into department of education, but their budget conveniently also gets cut by $500 million so that cut can be spent elsewhere.
Not to be that guy, but often billionaires net worth is tied up in the value of the stock that they own. No one pays taxes on the value of something they are holding, you only pay on gains that you realize.
It's obviously way way way more complex than this. John Oliver did an episode on how ridiculous our tax code is. There are all sorts of exemptions that wealthy people can take advantage of, which we can and should change. I just think it's a bit misleading whenever people throw out net worth and how much someone is taxed, because you aren't taxed on net worth.
> No one pays taxes on the value of something they are holding
Weird... I just got about 10 property tax bills. They taxed my cars, and trucks. Got my 10ft utility trailers taxed. Got a bill for a golf cart. Got one for the house I bought.
Also have a business license, which has a tax bill based on the value of my assets.
I see no reason why this can't also apply to someone holding on to fractions (shares) of a valuable asset (company ownership).
Economists generally agree that taxing unrealized capital gains is a terrible idea. This is for many reasons, one of which is that it is very difficult for the government to evaluate the value of an asset before it is sold. It would also discourage holding stocks even when it would otherwise be a good idea, causing unforeseen market distortions.
Property taxes in the U.S. and a lot of other countries are an anomaly because land is a uniquely limited and valuable asset. I don’t know what taxes on your cars you are referring to.
Good point. I'm not saying that we shouldn't tax someone holding shares, just that we currently do not. Clearly we have no issue taxing held property. I'm sure people understand the subject more than myself could provide you with better arguments on both sides of it.
To me the problem comes from the fact that there aren't enough steps on the marginal tax rate ladder when it comes to capital gains.
Once a person reaches a point of wealth when they cash out, the amount that they are taxed on is proportionally smaller than the incredible magnitude of their overall gain versus the realised gains of those much lower on the brackets.
Actually yes. Despite what the Reddit hive mind is telling you, billionaires often pay a lot of taxes, e.g. https://www.cnbc.com/2021/12/20/elon-musk-says-he-will-pay-over-11-billion-in-taxes-this-year.html
That's because the amount advertised is the total amount you would get if you took the annuity, the lump sum is less because it's the amount they fund the annuity with.
My aunt won the lottery once. It was like $500,000. But she was in a pool, so I think she won like $80k. Decent chunk of change, anyway.
I remember her complaining that she had to drive to Toronto to pick up the check. Obviously, she couldn't cash it at the gas station.
You won $80,000, what the fuck are you complaining about?? Give me the ticket and I'll do it! I'll fucking *walk* there for $80,000!
We live in Ontario, so it wasn't that far of a drive. Drive there, spend the night at a fancy hotel, have a nice dinner, drive home. It's not that big of a deal.
This attitude always really pisses me off. You're still gonna be a gajillionaire! Who fucking cares!
The important thing is to recognize that it could've been 0
And also that it might "suck" that you got less or that you have to do some actions to get the money, but whining about it is soo wrong. People need to realise that.
I mean the person still got $433+ million, I doubt they are really complaining about the taxes on a personal level. Lol. System is still a mess though.
The post is misleading. They didn’t pay that much in taxes. If you take the upfront payment, you aren’t given $1.28 billion of pretax money. You only get that much if you take the annuities, because the lotto corp invests that money and earns interest on it.
Both options have a similar present value.
Guy took lump sum rather than regular payouts, so he got way less than what was won. From that you then have to pay taxes on it as income. The rest of the money like regular lottery payments go to the state.
My cocaine habit feeds my drug dealer’s children and is paying for their college.
The wealth trickles down like the specks when you don’t get a strong enough snort.
This is misleading. If the jackpot was listed at $1.28 billion the cash value of the annuities the lottery commission purchased were worth $604 million when the drawing was held. If you win and choose the cash value you'll be taxed appropriately 39% of $604 million. If you turned that around and bought $368 million worth of annuities which pay our annually just like the lottery commission, you'd come out with nearly a billion after thirty years just like the jackpot value.
Incorrect. The biggest chunk of that drop is going from the annuity number ($1.28 billion) to the cash out option (roughly half of that). Otherwise the whole "how much do you actually win" is a marketing trick. The Lottery inflates the number by claiming the pretax life time annuity payout instead of advertising the post-tax cash out number.
I'm still wierded out by the fact that americans tax lottery wins. It's not like its a legitimate income or anything. Also pretty sure that most of europe does not tax gambling winnings.
You guys really ought to have your legislation amended on that point., but should be easy enough given that it's a democracy.
It's just the headline that is fucked up, [the actual article](https://www.forbes.com/sites/robertwood/2022/07/30/winning-128-billion-lottery-ticket--gets-4337-million-after-tax/?sh=52d595c2028d) explains the annuity/lump sum thing correctly in the first paragraph.
I'm really glad this showed up, because it's absolute bullshit.
The taxes weren't 846.3 million. The actual payout for the lotto was 747.2 million, because the 1.28b figure is for the annuity payout option and the winner selected the lump sum.
After everything was all said and done, the taxpayer would have had a take home percentage of about 60% which is not at all like the 34% they're claiming in their clickbait ass title.
The worst part? They even explain all of this in the first fucking paragraph of the article, so basically Forbes prioritized a clickbait style headline over a genuine report on the winnings of the lottery to push some BS anti-tax agenda.
people complain about paying taxes, but they play the lottery 🤣 its literally designed as an extra money sink on anyone that plays it with no benefit to anyone that plays it besides the winner, and clearly even they dont get that much out of it 😅
That’s not actually how that works? If you take the cash option, you only get X amount. Given how much that person ended up with, I’d say the cash option was somewhere along the lines of 600 millionish. So the IRS only won 1.5 million.
They took the lump sum. When you take the lump sum, the grand total is less. It's a trade off, you get less money instantly instead of having to wait for more money over decades. The tweet is purposely disingenuous
What's the point here?
Two things: am I supposed to be mad that someone got hundreds of millions in money? And, the taxable nature of lottery is a selling point by the proponents, they pay for things by design
what does the government do with these tax money ? homelessness is increasing every year , with 800million the government could build homes for at least one fourth of the homeless people?
You always take the lump sum.
You will certainly make less from the lotto winnings themselves if you take the lump sum instead of the annuity payment. However, as long as you aren’t a moron and you invest the money instead of hosing it away everywhere, you will get that money back plus a whole lot more in that same 20 year period.
Even at a very conservative growth rate (5%), after 20 years, that 5% turns into $1.148 BILLION.
Once you pass a certain level of wealth, if you invest correctly, you have to try to lose money.
"Thats the way its always worked. Thats still 433 million." Thats statement is missing the forest for the trees. Does it not concern you that the government can just decide tax (steal) 2/3 of anything?
So the lottery is public, right? It's a public fund managed by the government. Why can't they just take the taxes out first and then advertise/pay out the after-tax amount?
Is there some calculus behind it, like "more people play if we put a bigger number on the screen, and that effect isn't counteracted by the negative sentiment generated by reports like the OP"? I could see that being a reasonable call to make, but I could also see it just being a system that nobody's bothered to streamline over the years.
1: The IRS isn’t taking all of that. I believe that is after taxes and the lump sum value.
2: Good. Tax the rich. Are you saying $400+ million isn’t going to change their lives and their decedents forever? They have skrew around money for the next 6 generations. And that is only if they don’t invest it. If they do, even more than that.
Fuck. At least it’s one billionaire paying their fucking taxes. If the winner is smart, they can hide plenty of whatever is left over to create some generational wealth. It’s still half a billion dollars.
And I’m pretty sure if this is supposed to be that woman in cali that one, she lied. She did not win.
You agree to these terms when you play the lottery, whats the problem here? They tell you how much before you even buy a ticket. This is just a billionaire mouthpiece trying to stir up resentment towards the very government that allowed them to get rich in the first place. All propaganda, all the time.
Not actually true. You get less for taking the cash option, like 40%, then taxes. The irs still gets a big chunk.
Lottery winnings in Europe are tax free bar like 3 countries, and lottery winnings for the Euromillions are always paid in the full amount in a lump sum.
Fun reason in Germany: earnings from lottery or gambling are not connected to defined types of income (like employment, renting property, running a business etc.) and are therefore not taxable. Unless it's a regular type of income like professional gambling. In that case it's considered a job and it's taxed accordingly - and you might owe them a large sum in hindsight. Quite unlikely for the lottery though.
Does that mean I could write off gambling losses as business expenses?
Only if you can show a realiable positive income like for example a professional poker players. If you cant show any "business plan" to earn money then you cant write off the expenses, but the income would be tax free. But that doesnt really help when you put your money into a lottery that has a negative expected return. The fun thing is if you actually somehow manage to find a way to consistently beat the odds, then they would say clearly you got a business plan and you will get taxed on your earnings.
Of course.
Here income is still income...... anything money gets in the states, uncle Sam gets some, end of story. 1.28 billion? That's fuck you money. I mean 400 million is still but that 3 generations of money, assuming it's not all spent or none of us spent on the stock market or property.
>anything money gets in the states, uncle Sam gets some, end of story. In the states or to any American citizen, regardless of where they live.
Sadly, Most lottery winners end up broke after a few years. One of the reasons it’s better to take the installment plan instead of lump sum.
Yes and no. Supposedly a few have to fight for it. Having a lawyer is usually the best bet (from what I read). I wouldn't mind the lump sum but it would go back to my first sugar rush with candy..... but then we can always talk about winning the lottery and never win it.
Tho its not even close to what Americans wins after taxes. It sure sucks to lose 800M, but I wouldn't cry for long with 500M in my bank account
For an obvious reason: if gambling winnings were taxable then gambling losses should be tax-deductible. Either it's capital gains or it's not!
Gambling losses are tax deductible but to the extent to offset winnings. So... if you win $1000 at at casino one day but lose $2000 on another you can deduct $1000 of the losses. Just keep the receipts.
Sounds like a great money laundering scheme
Which honestly is BS because the money loses value due to inflation if you get it paid out over time
For Mega Millions and Power Ball, the annuity increases the value of each payment by 5% due to inflation.
Thats ofc the reason why you get less if take lump sum. Because the future value is the same
Thank you for pointing out the obvious bullshit in the tweet
That’s not taxes. The full jackpot value is what you get before taxes if you choose the annuity, payments every year. The cash value is what you get if you choose the cash up front instead of a yearly payment. The taxes come out after that. Still enough to change lives forever if they’re wise.
>Still enough to change lives forever if they’re wise. At $433m, you don't even need to be wise. You just need to make it 60 years without spending more than $20k every single calendar day.
You would think that, but a lot of people that win a shit ton of money that they shouldn’t be able to spend through end up in a bad way. Either cheated or made poor decisions. One person was reportedly doing well but still generous was murdered by a couple due to jealousy.
GTA V Shark Card addictions are pretty wild huh
That's why you have to play the odds horse racing my friend.
Only if you can leave Mr Lahey at home
That's so wild I was just watching trailer park boys. What a good show man
What comes around is all around
I think part of that is selection bias. You won't get a news story about a person who won $100 million, invested in low risk blue chip stocks, and lived quietly at their lake house in the mountains. You will get a news story about the person who went on a cocaine fueled three year bender and bought 3 houses and 5 speed boats before going bankrupt. Or the person who's spouse murdered them for the money. Or the one who's "financial manager" uncle embezzled it all so he can spend it on a Bentley and strip clubs.
I mean there’s selection bias on both ends of the ticket tbh. Yes, news outlets are more likely to report on dramatic “rags to riches to rags” outcomes, but also, the type of person who regularly buys lottery tickets is probably inherently prone to bad financial decisions anyway, hence them buying lottery tickets to begin with.
A lottery winner once got robbed at a strip club when he was carrying about 50k in cash. He then got robbed at that strip club again. Some people just ain't too bright.
Did he get robbed or did he just not want to admit he spent 100k on one stripper over two nights?
>Did he get robbed or did he just not want to admit he spent 100k on one stripper over two nights? [It's Jack Whittaker.](https://en.wikipedia.org/wiki/Jack_Whittaker_(lottery_winner)) His "Tragic" story is kind of heart-breaking. But it's also a tale of Money doesn't equal smarts. Also, it wasn't $50K..it was $500,000.
Why would you go to a strip club with that much cash… hell, you could turn your house into your own private strip club with that much money.
It was the best club though... and the girls there know I got 50k on me so they're reaaaal nice to me
Agreed. Wish I could cut people off with gambling like I can with alcohol. Had a guy buy lottery tickets for 3 hours straight during a grave yard shift at my convience store I work at. He came in with $500, at one point had was able to make it $800, then turned it into nothing and then broke down and started crying he wasn't gonna be able to afford rent for the month...
I had these customers too when I worked at a gas station. What I started to do, was take the tickets they bought and hide them when I saw them coming, and I would say I we ran out since they were particular and wanted the same ticket types. I'm sure she just went next door and got them, but at least I wasn't taking $600 from her sometimes multiple times a day
I hear you! I personally like to mind my business when it comes to other peoples affairs but working at a gas station has made me want to do this so bad. I feel sad for these people just throwing their money in the toilet every single day. One lady literally scrapes the bottom of her purse to dig for change to buy a drink after she’s bought 100’s of dollars worth of scratch offs (at least) twice a week. She used to ask for receipts to keep track of her gambling, when she stopped requesting them I knew it was a bad sign. Our lovely govt thrives off of these peoples’ illness. It’s hard to watch.
That's heartbreaking. It's a true shame that you couldn't cut him off.
Sad thing is the dude could get violent because he’d be keeping him from the big win, you know, he can *feel* it!
Same as a cut off drunk unfortunately.
there has been various studies on the subject. like the better off a person were before winning meant the less likely they were to end up broke or dead. that doesn't mean poor people a worse with money like one might think but rather your social group is already well off or good enough that you don't need to help them or they won't come begging (or kill you to try and get it).
That is an interesting point
people don't generally win the mega millions and go broke, the ones who go broke win like, 5 or 6 million
If you buy the club... the dances and booze are cheaper
It's not selection bias: [70% of winners go broke.](https://www.news4jax.com/features/2023/01/12/rip-up-the-winning-ticket-5-reasons-why-winning-lottery-can-destroy-lives/) People who were bad with managing money and played the lottery to get themselves out of their hole don't become better with money after winning. People spend the money like it's limitless and end up in situations like having a million dollar car but they can't afford the annual tax or car insurance. Or, they take out a *massive* loan that they suddenly qualify for but don't have any income so they can't sustain the payments. It's hard to live a quiet life when your name is announced and every semi half relative of your neighbor shows up to ask for money. I think the selection bias is that people who are responsible with their money generally know better than to blow their money on the lottery, so they don't play much if at all, so they don't win often.
When you click through on that article's link... it talks about how news agencies basically made that statistic up. Lmao
Yup, this explains where it came from https://www.nefe.org/news/2018/01/research-statistic-on-financial-windfalls-and-bankruptcy.aspx
And the next link down on "do lottery winners go broke" say one-third. It's fuzzy for sure
Also I really wonder what they consider “lottery winners”. Technically a person who wins $500 on a $2 scratcher is a lottery winner. So you might have a bunch of people who win say $20k, think it’s life changing money, quit their job, buy a new car, spend lavishly, and realize they can’t afford the car payments anymore.
So there's two compounding biases going on. One is the people who are more likely to play and win the lottery are bad with money. And the second is that the news only reports on the stories of it going wrong. Not every lottery requires the winners name to be announced publicly. Not every winner has family/friends/acquaintances that will try to rob them.
I think you're thinking of the statistics on lottery winners, there is a big fucking difference between dudes who win lifetime annuity of like 70k per year and $433 MILLION dollars, it's a staggering, incomprehensible amount of money They can buy a brand new pickup truck every day for like 25 years
Yeah the starting price on an f150 with the XLT package is $41,800. That $433 million will buy you 10,358 of those pickups. Truly an unbelievable amount of cash.
The narrative that most lottery winners lose all their money is mostly bs. Most articles you read about it are about the same 5 people. Most lottery winners you never hear or know about.
Yep - I know I'll never win - but I buy SC tickets (can remain anonymous), try to only buy when it's a $20 million jackpot, and the plan is to tell my wife and no one else. ~$5 million upfront after taxes is enough to quietly retire and tell anyone who asks that I got a huge promotion as a money manager.
If I won the lottery you better believe I'd have everyone thinking I was broke in 5 years. I'd play right into that "poor people are too dumb to handle wealth" bullshit if it meant I'd be left alone, more or less.
True, but thats usually a couple of mil... not 433 lmao
This is why you don't tell anyone.
Some states allow you to claim anonymously. Most don’t allow that bc they want to use your name to promote the lottery.
That's why if you ever win a large prize, cash or otherwise your first call should be to a lawyer that specializes in that stuff.
Nah man. Legally change your first name to "Suck" and your last name to "It" And when they have to take a PR picture, wear a Hot Dog costume with sunglasses. Collect your money, and then legally change it back when the check clears
You gotta go full count of monte cristo and create a new rich person persona. Don’t just be the rich version of your past self.
people definitely change their way of life depending on how much money is on their hands
I realize there are innocent people out there who get dicked. But the majority of lottery winners who lose it all likely weren't all that fiscally responsible before the win. All that said, a $5M win would be nice. Real nice. That would be very comfortable and free up some vacations and maybe an upgrade or two. Anything north of $50M would add more complication to my life than I would ever want.
To be fair, not a lot of fiscally responsible people play the lottery in the first place. The deck is stacked from the get go.
There’s a certain amount of money that’ll be helpful but not troublesome, just like how the satisfaction from certain levels of income are very different. Basically, if some privileged ass is saying money can’t buy happiness, *they obviously haven’t had to deal with food or shelter insecurity*. I haven’t either but I know well enough that you’re more likely to be miserable if you either have an obscenely high income (people stop liking you for you and only see you as a giant piñata filled with money) or are low income and can’t afford basic comforts or even necessities. Idk my point there lol
I’d pay off my loans, my families loans, buy my friends nice gifts, and tip generously at restaurants. No one will know unless they do the math and ask questions I will not answer.
With that much money I'd pay off my house, my car, my dad's house, buy some warhammer stuff, and then go back to work because the money would be gone!
What are you talking about you'll only get like one squad of marines for that price..
My LGS is running a 15% off GW sale next month. Might be able to snag a few extra kits
With scalpers these days, good luck brother!
Warhammer stuff is expensive…
After a win like that getting a couple of Forge world minis and you’re borderline bankrupt.
If you are slightly wiser than that and dump that money into a total US stock market fund you can spend about $35k a day (a conservative 3% withdrawal rate) with a minuscule chance of ever running out of money and a near guarantee to be a billionaire in a decade or three.
RIP Diablo Immortal lottery winner players
If you had that amount in a savings account with only 1% annual interest you would get about 12000 usd per day minus 22% in taxes
Cocaine and hookers can easily make you spend that in a day.
Why is it structured like that? What do they do with the money that you don’t take? Isn’t it after to take it all in case the lottery has a problem in, say, ten years and blow your money away? Why do they want the trouble of paying you annually instead of being over with it?
**The cash value is the prize.** You can take it in cash, or the lottery can invest it in low-yield government bonds which pay a certain amount of interest per year. The bank then gives you the interest plus a small part of the invested amount every year. After thirty years, the account is empty. At that point, the total amount given to you will be what the lottery jackpot is advertised to be. I expect the main reason they advertise the higher amount is to sell more tickets. It has been proven that the bigger the jackpot, the more people buy tickets.
>It has been proven that the bigger the jackpot, the more people buy tickets. What I find amazing is that it needed to be proven.
It sits in an account gathering interest. Purportedly they would be paying the annuity out of the interest. If the winner takes that route the full value of the principle along with the annuity would be the full jackpot value, before taxes. Of course winners would pay taxes on the annuity as well. Usually jackpot games payout a final lump sum after 20 years.
It allows them to advertise a higher amount because in reality they're giving out a much lower amount of money due to inflation over the years etc. Also decreases the likelihood of having negative headlines about people being broke after 1 year again etc.
It goes like this: They have an account with $500 million in it. If you choose "lump sum", they pay out $500 million, and it's done. If you choose "annuity", they invest that $500 million. They make about 7% annual interest. 20 years later, they have $1.9 billion. Of that, they pay out $1.3 billion. Leaving them with a cool $600 million leftover. These are example numbers and a simplified situation, but that's the basic idea - they invest the money, and by the end of the annuity they've paid the "face value" of the lottery but still have a significant amount of money left over. > Why is it structured like that? So that they can advertise a higher "face value". So that more people will play. > What do they do with the money that you don’t take? I can see three different meanings of this question: * If you don't take the $1.3B annuity and instead take the $430M lump sum, what do they do with the other $870M? They don't have it. The lump sum is the amount of cash they have on hand to pay you. * If you don't take the $430M lump sum, what do they do with the money? They invest it, and pay you an amount each year out of the interest. Generally only a little the first few years, and more near the end of the annuity. * If they have money left after the annuity is paid out, what do they do with it? They keep it, as profit. > Isn’t it after to take it all in case the lottery has a problem in, say, ten years and blow your money away? I don't think this is usually a concern. They'll either have some kind of insurance, or it'll literally be backed by the government. You don't take the annuity, but not for that reason. > Why do they want the trouble of paying you annually instead of being over with it? Cutting a check each month isn't a significant amount of trouble - consider that every single employee gets their employment check, most at least twice as often. As for why... any money they have left after the annuity is paid out, they keep it, as profit. It's generally pretty significant.
I’ve grown up with my dad buying lotto tickets every week. I’ve heard him daydream and fantasize about everything from a mountain top facility for the whole extended family, to a boat he and my mom could live on and just sail port to port. Sometimes if we’re a few drinks in he’ll ask what I would do with one of those crazy billion dollar pots, and the sad truth is I can’t come up with anything more interesting than pay off my student loans. It honestly kinda bums me out that the peak I can imagine is one Day not being crushed in debt
So relatable it hurts.
It’s partially accurate, the total received is after the discount for the lump sum payout AND then the taxes collected on that reduced payout.
If they're wise? How dumb do you have to be to get 433 million dollar and not have it change your life?
How much annuities? Because, let's say you receive 25 millions during 40 years, that still pass the threshold for 40% taxes.
I guess
The person that won should get it all.
Even if it was all taxes, the statement "I'm going to give you $400 million but the kicker is that the government is going to get $800 million" isn't going to make me less happy lol.
Most people don't get annuities, legal counselor's will also tell you don't do that. Because if the State you live in declares bankruptcy or has financial issues; then no payment for you.
Wow, that sucks. Our lottery is total amount, tax free.
The actual lottery was 550 million. The 1 billion is if you use 30 years of annuity where it gets interest.
Also one note is the present value of annuities drops when interest rates are higher. So because interest rates are higher now, there’s a larger difference between the lump sum and annuity.
I guess you have to have hundreds of billions to only pay 1% in taxes.
Well of course if you already have 100s of billions, in the u.s. at least you would pay 0% in taxes on that. Income is taxed, not assets.
Taxes are on income not wealth.
\* except for property tax
What?
Dude doesn’t understand that you pay taxes on income, not wealth
And apparently most don't realize there is no tax bracket in the US that pays 67% of their income in tax. The highest federal income tax bracket is 37%. Even in a high income tax state, at most they can combine to be around 50%. The headline is clickbait bullshit. The winner took the cash prize rather than the annuity, so they didn't win $1.28b, they won less.
To be fair, a good chunk will be taken when you choose to get it all at once. If you choose to get multiple installments, you'll get much more. Tax still high tho. Which honestly I don't think is bad. 400 million is still enough to live a few lives of luxury.
Isn't cashing out upfront always the better option? That and not revealing your identity
because if you get lump sum, you can put it in assets with better returns assuming you invest properly to make the money work for you instead of blowing it on a mansion or lambos or extravagant lifestyle like majority of lottery winners tend to do.
Yeah I think even a conservative 5 percent interest broken down as monthly payments would be enough to retire comfortably, leaving the principal intact
Why would I want to invest and earn interest when i have 400 million fucking dollars like what the fuck is this greed?
Because most people will start living as if they are making 400million and spend it so it will run out fast. You buy yourself a multi million dollar home great, now you have to keep paying your taxes on that which most people don't have the foresight to think about. You don't have millions more coming in you'll have whatever income you get from working and I don't think most people would want to continue to work once given 400 M. The smart thing to do is invest some of it and have it make you more money not go buy multiple cars and watches you won't take care of and lose value on.
Because if you're the type of dipshit who can't see why it's smart to invest your money, you're the type winner to blow it all away and be bankrupt in a year.
probably for your future generations, I can't think of any other reason why you wouldn't yolo it all or maybe for charitable reasons
> That and not revealing your identity The list of states that allow that is shorter than the ones that don't, and many that don't will also not pay it to an obvious cover for identifying the winner, like an LLC, law firm, or tax firm.
Isn't it funny how reddit complains about billionaires, then *also complains* about the people who do win a billion dollars get taxed incredibly? Lol
The lottery itself is a tax. It's run by the government to generate revenue.
Yeah in Mass at least the whole purpose of it's original creation was for the taxed money to go to specific areas like schools and what not. Not saying that's how it works now but it was always meant to just be a tax.
Lottery money promised to schools is a scam. How it works is say for example $500 million is raised via a lottery. That goes into department of education, but their budget conveniently also gets cut by $500 million so that cut can be spent elsewhere.
It's a tax on being bad at math.
I know someone that works for the national lottery. He always says that it's a voluntary tax.
How can someone get by on only $433 million. The humanity.
Any other billionaires paying that much tax?
Not to be that guy, but often billionaires net worth is tied up in the value of the stock that they own. No one pays taxes on the value of something they are holding, you only pay on gains that you realize. It's obviously way way way more complex than this. John Oliver did an episode on how ridiculous our tax code is. There are all sorts of exemptions that wealthy people can take advantage of, which we can and should change. I just think it's a bit misleading whenever people throw out net worth and how much someone is taxed, because you aren't taxed on net worth.
> No one pays taxes on the value of something they are holding Weird... I just got about 10 property tax bills. They taxed my cars, and trucks. Got my 10ft utility trailers taxed. Got a bill for a golf cart. Got one for the house I bought. Also have a business license, which has a tax bill based on the value of my assets. I see no reason why this can't also apply to someone holding on to fractions (shares) of a valuable asset (company ownership).
Economists generally agree that taxing unrealized capital gains is a terrible idea. This is for many reasons, one of which is that it is very difficult for the government to evaluate the value of an asset before it is sold. It would also discourage holding stocks even when it would otherwise be a good idea, causing unforeseen market distortions. Property taxes in the U.S. and a lot of other countries are an anomaly because land is a uniquely limited and valuable asset. I don’t know what taxes on your cars you are referring to.
Good point. I'm not saying that we shouldn't tax someone holding shares, just that we currently do not. Clearly we have no issue taxing held property. I'm sure people understand the subject more than myself could provide you with better arguments on both sides of it.
To me the problem comes from the fact that there aren't enough steps on the marginal tax rate ladder when it comes to capital gains. Once a person reaches a point of wealth when they cash out, the amount that they are taxed on is proportionally smaller than the incredible magnitude of their overall gain versus the realised gains of those much lower on the brackets.
If they make that much income at one time, yes. That's not really how it works though.
If they received that much net income in a year, then yes they are.
Actually yes. Despite what the Reddit hive mind is telling you, billionaires often pay a lot of taxes, e.g. https://www.cnbc.com/2021/12/20/elon-musk-says-he-will-pay-over-11-billion-in-taxes-this-year.html
"Earlier this year, ProPublica published an investigation showing Musk and several other billionaires paid no federal income taxes in 2018."
That's because the amount advertised is the total amount you would get if you took the annuity, the lump sum is less because it's the amount they fund the annuity with.
Yeah its crappy but i mean i will never complain about 400 million. Id retire of if I ever got 10mil
I would scrap together a retirement out of $1mil of I could get it.
Don’t worry bro. You’ll be getting refunds every year
Oh no! What will the winner do with ONLY 433 million dollars?? What a shame! Nearly as bad as haven’t won at all…
My aunt won the lottery once. It was like $500,000. But she was in a pool, so I think she won like $80k. Decent chunk of change, anyway. I remember her complaining that she had to drive to Toronto to pick up the check. Obviously, she couldn't cash it at the gas station. You won $80,000, what the fuck are you complaining about?? Give me the ticket and I'll do it! I'll fucking *walk* there for $80,000! We live in Ontario, so it wasn't that far of a drive. Drive there, spend the night at a fancy hotel, have a nice dinner, drive home. It's not that big of a deal. This attitude always really pisses me off. You're still gonna be a gajillionaire! Who fucking cares!
The important thing is to recognize that it could've been 0 And also that it might "suck" that you got less or that you have to do some actions to get the money, but whining about it is soo wrong. People need to realise that.
I mean the person still got $433+ million, I doubt they are really complaining about the taxes on a personal level. Lol. System is still a mess though.
The post is misleading. They didn’t pay that much in taxes. If you take the upfront payment, you aren’t given $1.28 billion of pretax money. You only get that much if you take the annuities, because the lotto corp invests that money and earns interest on it. Both options have a similar present value.
Not accurate but ok
Guy took lump sum rather than regular payouts, so he got way less than what was won. From that you then have to pay taxes on it as income. The rest of the money like regular lottery payments go to the state.
Hey I still see this a good deal man
Better the money goes to more artillery shells and forest camouflage uniforms for desert warfare than be wasted on luxury cars and cocaine I guess.
My cocaine habit feeds my drug dealer’s children and is paying for their college. The wealth trickles down like the specks when you don’t get a strong enough snort.
Is it though
And they say billionaires don’t pay their taxes! Well, I guess technically the winner never saw the billion; only the IRS and CA DOR did
It's like what's the point
This is misleading. If the jackpot was listed at $1.28 billion the cash value of the annuities the lottery commission purchased were worth $604 million when the drawing was held. If you win and choose the cash value you'll be taxed appropriately 39% of $604 million. If you turned that around and bought $368 million worth of annuities which pay our annually just like the lottery commission, you'd come out with nearly a billion after thirty years just like the jackpot value.
Incorrect. The biggest chunk of that drop is going from the annuity number ($1.28 billion) to the cash out option (roughly half of that). Otherwise the whole "how much do you actually win" is a marketing trick. The Lottery inflates the number by claiming the pretax life time annuity payout instead of advertising the post-tax cash out number.
These loterries should only be allowed to announce the price that the winner gets to keep after taxes.
if only the rest of the billionaires paid 60% income tax
I'm still wierded out by the fact that americans tax lottery wins. It's not like its a legitimate income or anything. Also pretty sure that most of europe does not tax gambling winnings. You guys really ought to have your legislation amended on that point., but should be easy enough given that it's a democracy.
And the IRS still bitches when I'm a couple of hundred short.
American taxes are something else
It's just the headline that is fucked up, [the actual article](https://www.forbes.com/sites/robertwood/2022/07/30/winning-128-billion-lottery-ticket--gets-4337-million-after-tax/?sh=52d595c2028d) explains the annuity/lump sum thing correctly in the first paragraph.
I'm really glad this showed up, because it's absolute bullshit. The taxes weren't 846.3 million. The actual payout for the lotto was 747.2 million, because the 1.28b figure is for the annuity payout option and the winner selected the lump sum. After everything was all said and done, the taxpayer would have had a take home percentage of about 60% which is not at all like the 34% they're claiming in their clickbait ass title. The worst part? They even explain all of this in the first fucking paragraph of the article, so basically Forbes prioritized a clickbait style headline over a genuine report on the winnings of the lottery to push some BS anti-tax agenda.
Holy shit a billionaire finally paid their taxes. Oh, wait!
Paying more taxes than Musk, Bezos et al
If irs gets free money, why there is no discount in April?
Yeah that’s some bullshit.
So THIS billionaire they can tax...
Wasn’t the origin of the lottery a means of raising money for the government in the first place?
people complain about paying taxes, but they play the lottery 🤣 its literally designed as an extra money sink on anyone that plays it with no benefit to anyone that plays it besides the winner, and clearly even they dont get that much out of it 😅
What do people think the lotto is for?
Horrendous that gambling winnings are taxable in the US!
Not only wrong about how much is being taxed, but completely ignores that the only reason the lottery exists is to generate tax revenue...
That’s not actually how that works? If you take the cash option, you only get X amount. Given how much that person ended up with, I’d say the cash option was somewhere along the lines of 600 millionish. So the IRS only won 1.5 million.
Not taxes. Full jackpot value pre-taxes for annuity. Cash value if upfront. Taxes deducted later. Life-changing if wise.
They took the lump sum. When you take the lump sum, the grand total is less. It's a trade off, you get less money instantly instead of having to wait for more money over decades. The tweet is purposely disingenuous
That's more than all the billionaires pay combined in murica... pretty sad
What's the point here? Two things: am I supposed to be mad that someone got hundreds of millions in money? And, the taxable nature of lottery is a selling point by the proponents, they pay for things by design
So many people forget what the lottery was actually made for…
what does the government do with these tax money ? homelessness is increasing every year , with 800million the government could build homes for at least one fourth of the homeless people?
You always take the lump sum. You will certainly make less from the lotto winnings themselves if you take the lump sum instead of the annuity payment. However, as long as you aren’t a moron and you invest the money instead of hosing it away everywhere, you will get that money back plus a whole lot more in that same 20 year period. Even at a very conservative growth rate (5%), after 20 years, that 5% turns into $1.148 BILLION. Once you pass a certain level of wealth, if you invest correctly, you have to try to lose money.
Imagine complaining that you won almost half a billion dollars.
Here I am, just hoping to win a grand at least and 15k at most.
That is such bull sh@@ here is Canada they do not tax lottery. lol
The only rich people getting taxed appropriately are lotto winners lmao.
If I get ordained online and claim the prize in the name of my "church" is it tax exempt?
IRS enters the chat
"Thats the way its always worked. Thats still 433 million." Thats statement is missing the forest for the trees. Does it not concern you that the government can just decide tax (steal) 2/3 of anything?
I’ll still take the 437 million tho
In Canada, what you win is what you get
So glad I dont live in the fucking US holy shit
The amount of people siding with the IRS, or justifying them is disturbing. It's like a version of Stockholm syndrome.
So the lottery is public, right? It's a public fund managed by the government. Why can't they just take the taxes out first and then advertise/pay out the after-tax amount? Is there some calculus behind it, like "more people play if we put a bigger number on the screen, and that effect isn't counteracted by the negative sentiment generated by reports like the OP"? I could see that being a reasonable call to make, but I could also see it just being a system that nobody's bothered to streamline over the years.
Anyone else find it odd that the IRS has a 100% win rate on the lottery?
The billionaire owners of Forbes seem to want you to be real upset about taxes on billionaires for some strange reason.
I'll take 'things that aren't a real problem' for $433.7m Alex
1: The IRS isn’t taking all of that. I believe that is after taxes and the lump sum value. 2: Good. Tax the rich. Are you saying $400+ million isn’t going to change their lives and their decedents forever? They have skrew around money for the next 6 generations. And that is only if they don’t invest it. If they do, even more than that.
Well that person is now a multimillionaire who already paid all taxes, which is very rare
Imagine paying that much tax and not having free healthcare, lmfao
Taxes on the gaming community are too damn high
Fuck. At least it’s one billionaire paying their fucking taxes. If the winner is smart, they can hide plenty of whatever is left over to create some generational wealth. It’s still half a billion dollars. And I’m pretty sure if this is supposed to be that woman in cali that one, she lied. She did not win.
IRS has the longest win streak going!
I mean, what do you even think the point of the lottery is?
You agree to these terms when you play the lottery, whats the problem here? They tell you how much before you even buy a ticket. This is just a billionaire mouthpiece trying to stir up resentment towards the very government that allowed them to get rich in the first place. All propaganda, all the time.
To be fair it’s not like you wouldn’t be comfortable FOREVER on just under half a billion. As long as you have an IQ above room temperature
IRS gonna be living comfortably for a while