Well, that article says the income tax exemption in California dates from 1984. When was Prop 13? And the article also says, “Pennsylvania and Delaware are the other states that exempt lottery winnings from their income taxes.”
Note the caveat, "if you buy the ticket in California.
Also not taxable WA, NV, TX, WY, SD, FL, AK, who don’t have income tax. As well as NH and TN, which have tax but probably not in this situation, as lotto is not interest or dividends. Though at least in NV’s case, there is no state lottery, so all winnings are out of state.
I think the OP just posted a stale link, or one that has been fixed, though you’d expect the website to get rid of those. If you go to the home page, they have the correct amounts (and drawing dates) for MegaMillions & Powerball.
You’d still be crazy to buy a lottery ticket from another country over the internet though.
Except the amount in the OP is almost exactly the Powerball jackpot for tomorrow, although the site identifies it as the Mega Millions jackpot. So at best they’re sloppy.
Has anybody bought a lottery ticket from another country, won the drawing, and been able to claim their prize? I have no clue how to research something like that.
Back in the 70s and before there was a thing called the Irish Sweepstakes run out of (surprise!) Ireland. See https://en.wikipedia.org/wiki/Irish_Hospitals’_Sweepstake for a OK-ish potted history.
It was a sorta big deal in the US when I was a kid in the 1960s. Kinda like the Publisher’s Clearinghouse schtick in the 1980s, everybody had heard of it even though most folks hadn’t actually ever bought a ticket.
The directly relevant point being that wiki sez that in the 1960s at least one American won some hefty money (don’t forget inflation) through it *and *collected her winnings (net of the IRS’s cut.)
So apparently international wins and collections have happened at least once.
A foreigner claiming an American prize has to claim in person from the prize-issuers with proof of identity and any other condition satisfied.
Thus if you win the State of Louisiana’s lottery, for example, you attend the State authorities as directed.
They withhold perhaps 30%, which you will try and claim back from the IRS: they will also after the American fashion not pay it all at once, but in installments for many years.
If you cannot afford to fly to claim some issuers may help you with the costs of claiming beforehand, to be deducted later.
Having said all that it might be easier to have a trusted American friend claim with the ticket and rely on them remitting monies or placing it in a joint account to which you have access. On the other hand I imagine the IRS would make this difficult.
Huh? Don’t most major lotteries allow you to choose the lump or the annuity? Or only certain states.
I believe that you can choose annuity or lump sum, no matter where you win, for the big lotteries like Powerball and MegaMillions.
Seems to be that before this century annuities often the only option, which sucks if you won aged 80; but now you can chose the lesser lump sum or trust the State for 30 years. There are many angry people wedded to one ‘correct’ choice on the internet.
I’d take the money.
Mr. UGEL: Well, it is, especially most lottery winners who won prior to the year 2000. Virtually, all of them had to take their prize in an annuity rather than in a lump sum. And so they’re dolled out their winnings over a period of 20 - possibly 25, 26 years. And so someone who wins $1 million in the lottery is really only getting, after taxes, you know, about $35,000 a year. Even someone who wins $10 million is really - is just getting $500,000 a year and that’s before taxes. And so they’re probably looking at close to $350,000.
- this house and not to (unintelligible) the many houses that you end up in as a traveling lump sum salesman, a title my parents were very proud of. You know, they’re - gold is a predominant theme. You see a lot of gold. It looks like Donald Trump’s funeral home.*
NPR
Speaking of what, an earlier American president managed a lottery with slaves as prizes ! General Washington always appears to me the living walking embodiment of ‘Bomber’s Law’: “We Did It For The Money”.
Yeah I might be thinking of the big jackpots. But smaller prizes like 5 figures don’t even give you annuity option i think. My grandparents won a decent sum, something like $20,000 plus, when I was a kid. Small party, probably kept the rest.
IIRC the lump beats the annuity even if you invest very conservatively. The latter doesn’t account for inflation.
For the big US lotteries it used to be the case that you had to choose the lump sum or annuity option for the big jackpot at the time you purchased the ticket. But each option was equally available. Sometime around 2000 or 2005 that changed. Subsequently the jackpot winner could decide which option to take after they knew they were the winner.
I suspect much of the angst under the old system was that the default was annuity. The typical big winner is not the most financially astute person and may never have understood the implication of their non-decision earlier to fail to specify the lump sum they now wanted very badly.
As another matter, IIRC that over the years the common annuity options have stretched. They used to be 20 year annuities. Then 25. And now 30 is the annuity period for the big two: Powerball and Mega Millions. As the jackpots have grown, it make some more sense to stretch out the payments. Which remaining payments are fully inheritable if/when the winner dies.
Well, I will say despite the fact I would select the lump sum on principle,the cheating rascals do have a heavy incentive to agree to the annuity:
*Winnings (in the U.S.) are not necessarily paid out in a lump sum, contrary to the expectation of many lottery participants. In certain countries, mainly the U.S., the winner gets to choose between an annuity payment and a one-time payment. The one-time payment (cash or lump sum) is a “smaller” amount than the advertised (annuity) jackpot, even before applying any withholdings to which the prize is subject. While withholdings vary by jurisdiction and how winnings are invested, it is suggested that a winner who chooses lump sum expects to pocket 1/3 of the advertised jackpot at the end of the tax year. Therefore, a winner of a $100,000,000 jackpot who chooses cash can expect $33,333,333.33 net after filing income tax document(s) for the year in which the jackpot was won.
*
Lottery annuities are often for a period from 20 to 30 years. Some U.S. lottery games, especially those offering a “lifetime” prize, do not offer a lump-sum option.
Plus…
*In some countries, lottery winnings are not subject to personal income tax, so there are no tax consequences to consider in choosing a payment option. In France, Canada, Australia, Germany, Ireland, Italy, New Zealand, Finland, and the United Kingdom all prizes are immediately paid out as one lump sum, tax-free to the winner. In Liechtenstein, all winnings are tax-free and the winner may opt to receive a lump sum or an annuity with regard to the Jackpot prizes.
*
Splendid little Liechtenstein !
Agree there’s an element of misleading advertising in claiming “the jackpot is X million dollars” when what they really mean is "the sum of the 30 annual annuity payments, before taxes, is X million dollars. And the lump sum up front is less than the total of the 30 annual payments. And you will pay national and perhaps state taxes on the winnings. "
Nevertheless, for people who live in a country whose government is funded largely by income taxes, the idea that there’s pre-tax income and after-tax income and the difference is significant is almost like air: everybody knows it, nobody much talks about it, but everybody pretty well behaves as if they expect it to be there.
IMO the bigger misleading element is conflating the time-delayed sum of 30 payments with their total. Far more people intuitively grasp income taxes than understand net present value.
OTOH, the big US lottery is fairly honest about calling out this difference too. Here’s the home page: http://www.powerball.com. Right under the big letters saying (at this moment) "Current Estimated Jackpot $535 MILLION are the words “$338.8 Million Cash Value” in the same type size as most of the rest of the page content. It’s not fine print buried in a footnote on another page. The other main US lottery is here http://www.megamillions.com/ and has not quite as good disclosure, but still the lesser cash figure is shown immediately below the headline number.
Yes they are, but with one massive caveat.
If you win the big one, take the annuity, and die with 15 years’ worth of payments left, your relatives get to inherit the payments.
But the IRS is going to want its estate tax on the full amount, right now. Estate taxes and income taxes are different things, and you can’t spread your estate tax out over the 15 years of payments; you have to find a lump sum immediately.
In Canada, a decent number of lottery tickets are bought by pools - family, or co-workers together, etc. (When the group’s rules are not written down properly, it makes for some interesting lawsuits.) I believe I’ve heard of that for US lotteries too.
So how does that work? Are group prizes automatically paid as a lump sum? Can the winners split the annuity instead? I assume it can’t partly one, part the other.
(How does that annuity work? Does it keep paying for X years to the heirs, or stop if the winner dies?)
For groups, you have to have 100 or fewer people in your group.
In such cases, they give you (at least in California; i assume it’s similar elsewhere) a Lottery Multiple Ownership Claim Form, where you list each member of the group. The California Lottery handbook says that group winners all have to choose the same payment option, so if you’re part of a group win, you can’t have some people choosing annuity and others choosing lump sum.
As for the annuity, yes it is paid out in full, even if the winner dies. You can leave it to your heirs although, as i said in my previous post, if your total remaining payments are large enough to incur the US estate tax, the IRS will want the full amount up front.
I’ve got to say the big prizes, such as the Powerball and Euromillions have ballooned to such gigantic sums as to be meaningless: I could utilize any amount you care to give me, all the untold billions of the Glorious East, but it would mainly go to charity, as with most of the bandits of the Gilded Age, simply because after a while there’s nothing else to spend money on other than a key to Heaven.
So 150 million is much the same as 50 million for most of us, and it would be neater to have 10 people winning 15 million for example.
I understand my own greed too well, but there’s a reason I don’t sit down to 100 lb meals at a time even if I could easily afford them…
All true.
Ultimately the purpose of the lottery is not to make some lucky schlub(s) mildly or filthily rich. It’s to collect what amounts to tax money voluntarily. The payout is designed to give the max revenue for the least payout.
They’ve discovered by experiment that, at least in the US, the public is far more willing to [del]voluntarily pay tax[/del] buy a ticket for rare ginormous jackpots versus for frequent smaller jackpots adding up to the same *or more *total winnings per year.
And thus the wisdom of crowds shows its noble head.
Yes, lotteries are a stupidity tax. The dumber you are, the more you pay. I only pay $6 a week. 
Of course, at a certain point the winnings are such that it simply means you no longer have to ask the price of anything - you simply do what you want. However… we don’t see or hear about this happening to most winners. ISTM - for example - you want to go to… say, Portland - you simply call yor favourite bizjet company, and get on the plane a hour later. Want to watch the running of the bulls in Pamplona ? No problem. Want to see the Great Barrier Reef? Private yacht will take you there from the airport, plus your personal scuba instructor… etc. etc.